netanyahu - Emil Salman - January 10 2011
A cabinet meeting in 2011. Photo by Emil Salman
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Prime Minister Benjamin Netanyahu surprised his cabinet, and many others, yesterday when he announced he would decide whether to raise taxes on oil and gas production only after he conducted a series of meetings with ministers - and with the owners of the natural gas and oil exploration and production companies.

Netanyahu's comments caused an uproar due to reports on the enormous lobbying efforts of the gas and oil companies, who are said to be pressuring the prime minister and senior officials in his office to lower the state's share of the proceeds from recent natural gas and oil discoveries.

He made the comments only a few hours before the Sheshinski committee's recommendations that the taxes be raised were to be officially presented to him.

Finance Ministry sources said yesterday that they expected Netanyahu "would support the Sheshinski committee recommendations exactly as written." The treasury officials said they have met a number of times with Netanyahu recently on the matter.

Netanyahu's opinion on the new tax and royalty regime for gas and oil discoveries is critical, as it is almost certain that the cabinet will approve recommendations made by Netanyahu. The question is whether Netanyahu will adopt the the Sheshinski recommendations as is, or accommodate the oil and gas tycoons.

Netanyahu said he will meet tomorrow with representatives of the gas companies, including Yitzhak Tshuva, the controlling owner of the Delek Group; Jacob Maiman of Isramco; and Charles Davidson, the CEO of Noble Energy.

The prime minister told the cabinet he would decide quickly and bring his recommendations for a vote. He said he would recommend establishing a national fund for the gas and oil revenues, to be used for such purposes as education or defense.

Netanyahu met with representatives of the Sheshinski committee yesterday evening.

Prof. Eytan Sheshinski, the chairman of the committee, was present as were two other committee members: Prof. Eugene Kandel, the head of the National Economic Council, and Shmuel Tzemach, the director general of the National Infrastructure Ministry. National Security Adviser Uzi Arad and the director general of the Prime Minister's Office, Eyal Gabai, also attended the meeting.

Arad spoke of the need to protect the oil and gas installations from terror attacks, said sources present at the meeting.

Netanyahu said he will meet with the finance, infrastructure and environmental protection ministers, as well as Bank of Israel Governor Stanley Fischer, to discuss the issue.