By Keeping a Low Profile, Gas Baron Yitzhak Tshuva Gains Clout

His Delek Group committed to selling its 31.25% stake in the Tamar natural gas field, but not for six years. That was the masterstroke.

Tomer Appelbaum

Somebody was glaringly absent from the debate in recent months over the government’s capitulation to the natural gas monopoly of Houston-based Noble Energy and Israel's Delek Group: Delek owner Yitzhak Tshuva.

In contrast to his position in the discussions on exporting and taxing gas, Tshuva has lowered his profile and left the microphones to his hired managers, if to anyone.

It isn’t that Tshuva, who ranks second on TheMarker’s list of the 100 most significant people in Israel's economy, has stopped trying to wield influence or that his reputation has sagged. He has merely learned his lessons. He realizes that his public appearances draw fire, so laying low makes sense.

In public protests against the compromise between the government and the gas monopoly, most of the ire was aimed at Tshuva. In one demonstration, activists dressed up as poodles and walked around on all fours while wearing masks of politicians. And whose poodles were they? Tshuva’s, of course.

As the gas companies see it, the government is the one that failed to provide objectives that could be agreed on. The government should come crawling to them, persuade them to accept the changes it wants and explain them to the public. According to the companies, the fickle government is responsible for the chaos, so why should they get entangled in the stormy debate?

This isn't the only reason for Tshuva’s disappearance. Another is his negotiating tactic with the government. This has been apparent from the moment he realized in December that another round of talks over changes to the structure and regulations of the gas industry was inevitable.

While Noble objected to every change, repeatedly threatened to slam the door and only slowly softened a position here and there, Tshuva took the opposite tactic. From the get-go he didn't oppose the government or let himself be cast as an obstacle to compromise.

He even gave the government what it ostensibly wanted: He agreed to waive his rights to the Tamar gas field — that is, the ability to sell at full value. From the moment it was clear Tshuva had done his bit and exited the battlefield, he chiseled away at the waiver until he added conditions that emasculated it.

In the end, Delek committed to selling its 31.25% stake in Tamar, but not for another six years. During this time, all the field's gas could be sold via early export contracts, accompanied by significant tax breaks for the exporters Delek and Noble.

The outcome is that the gas will be valued at more than its market value. This plan spares the companies from enduring a competitive market in the future, because all the gas will already have been sold.

With the development of the Leviathan field back on ice since the discovery of a giant gas field off Egypt, the Tamar enterprise is a de facto monopoly. The government will again have to negotiate with Noble and Delek, but this time the companies will be stronger and flush with cash, while the state will be weaker, having already permitted gas exports.

Also, the government has already agreed not to undertake any measures that would infringe on the gas companies for the next 15 years.

So Tshuva’s vanishing act doesn't reflect the ebbing of an Israeli economic power. With the help of the state, his position is being perpetuated. In the meantime, he's simply keeping a low profile while the storm winds rage.