Government Offers Big Tax Perks to Gas Firms

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The Tamar well.Credit: Albatross

The government has proposed a compromise to the companies drilling the offshore natural gas sites Leviathan and Tamar, which would include major tax concessions.

The offer to the Houston-based Noble Energy and Israel’s Delek Group could reduce the state’s tax revenues from the production sites by billions of shekels. The concessions, which were presented to the companies by the government’s negotiating team, are designed to help ease the export of gas from the two fields to Egypt. Although they may require amendment of legislation, if finalized, they would allow an offset of other taxes that the firms would otherwise pay in the coming years.

The government would pay a portion of the cost of laying a gas pipeline from the Tamar field to Egypt even though current laws bar the state from funding such infrastructure or offsetting taxes for it. The companies maintain that the pipeline would serve the Israeli economy as a whole.

The government is also offering to alter a decision made two years ago that bars the license holders of the Tamar field, where production is already under way, from exporting any of the gas currently produced. The new compromise would allow gas to be exported even before a Leviathan pipeline comes online and would also permit larger exports of gas to Egypt.

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