Comptroller Urges Steinitz to Postpone Cabinet Vote on Controversial Gas Deal

Comptroller report will look into the reason Israel's natural gas market is concentrated in the hands of only two firms.

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Prime Minister Benjamin Netanyahu and State Comptroller Joseph Shapira, August 8, 2012.
Prime Minister Benjamin Netanyahu and State Comptroller Joseph Shapira, August 8, 2012.Credit: Emil Salman
Avi Bar-Eli
Avi Bar-Eli

State Comptroller Joseph Shapira urged Israel's energy minister Tuesday to postpone a cabinet’s vote on a controversial plan to develop Israel's gas fields pending the publication of his report on the issue.

Shapiro requested that Energy Minister Yuval Steinitz postpone the approval of the compromise plan for the natural gas market and hold a cabinet meeting on the matter only after he publishes a report by his office on the government's management of the lucrative resource.

 “In light of the fact that I intend to pass onto you and others [mentioned in the report] an updated draft report on development of the natural gas market later in the week, I would appreciate it if you could see to it that a cabinet decision is made only after the report is published,” Shapiro wrote Steinitz.

Publication of the report is expected to take a relatively long time, certainly much later than the July 22 date set by Prime Minister Benjamin Netanyahu for presenting the cabinet with the plan.

In December, Shapiro decided to look into the conduct of the government and regulators regarding the natural gas market, focusing particularly on the conditions that created a concentrated market in the field. The comptroller decision comes after years of TheMarker reports into the unsupervised and uncompetitive manner drilling and exploration permits were issued by the National Infrastructure, Energy and Water Ministry during the past decade.

From 2005 to 2010, the ministry’s Oil Council gave some 22 exploration permits to the Delek Group and 16 to Noble Energy. This was done although that the law restricts one business entity from holding more than 12 permits.

Together, these permits cover 60 percent of Israel’s waters, which means that the strategic partnership that emerged between the Delek Group and Noble Energy now hold almost all of Israel’s natural gas reserves. This monopoly gave these corporations enormous clout vis-a-vis the regulator in the Infrastructure Ministry.

As a result of public pressure, the Infrastructure Ministry required the natural gas corporations to return some of their permits, but left it up to them as to which ones they would retian.

In recent months, Shapira’s office has been examining the regulators' work, including the distribution of permits by the relevant ministry and the divvying of holdings between the owners of Tamar and the Leviathan fields. It is also looking into the long term implications of a monopoly on natural gas prices.

The comptroller’s report may also extend to the way negotiations have been handled between the government and the monopoly.

The Knesset Control Committee met Tuesday to discuss the negotiations in light of the fact that the government team conducting them acted without an official appointment and protocols and regular minutes of its meetings were not kept.

The Prime Minister’s Office claimed at the time that it could not convey the information because it was “professional groundwork only” and thus minutes were not kept and documents were internal.

The director general of the state comptroller’s office, Eli Marzel, said Tuesday that “such a senior team dealing with such significant an issue should have kept detailed minutes so we could scrutinize the decision-making.”

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