Gas Barons Dig for Gold, in Knesset

Representatives from no less than five lobbying firms and batteries of public-relations people descended on the Knesset, in a massive effort to paint the argument over royalties on natural resources in nationalist colors.

Representatives from no less than five lobbying firms and batteries of public-relations people descended on the Knesset yesterday, in a massive effort to paint the argument over royalties on natural resources in nationalist colors. Instead of arguing over how many percent of profit the government (read, the public ) should get from the exploitation of the vast reserves of gas found in the sea bed, urge the lobbyists on behalf of the gas companies - talk in terms of "blue and white industry."

"The pressure of the tycoons and the lobbyists on the Sheshinski Committee worked, and they aren't going to stop now," said Shelly Yachimovich (Labor ) yesterday. "The pressure they imposed against raising tax on gas profits are nothing compared with what will happen now."

On Monday the Sheshinski Committee, headed by Eytan Sheshinski, submitted its final report to Finance Minister Yuval Steinitz. The recommendations were a surprise in that the committee softened its position in favor of the gas exploration companies: The state should increase its share from future oil and gas profits from 30% today to between 52% and 60%, the Sheshinski Committee said. In the interim report it had suggested the state increase its take to 60%-70%.

The Sheshinski Committee's job was merely to make recommendations, which it has now done. The next stage is for a legislative proposal to be made, which would follow the usual route of enactment into law - hence the massive pressure now being imposed on the nation's leaders, whose decision it is whether to accept the recommendations, change them or reject them outright.

Yitzhak Tshuva
Michal Fattal

Though the Sheshinski Committee's recommendations were softer than expected, the owners of the gas companies are not pleased, it would seem. At yesterday's meeting of the Knesset Economics Committee on the subject, 10 lobbyists showed up, which is a ratio of almost 1:1 for the 14 Knesset members that attended.

Moreover, not all the Knesset members were present throughout the discussion: At times, there were more lobbyists in the room than legislators.

The lobbyists' firing power is augmented by batteries of public-relations managers working for the gas companies. Their aim is to sway public opinion in favor of the firms.

The cost of hiring all these people is certainly millions of shekels, but that's peanuts compared with the billions in gains the companies stand to make if their campaign works.

The primary aim of the PR blitz is to persuade Prime Minister Benjamin Netanyahu and Israel's ministers, and Knesset members, to toss out the Sheshinski recommendations before they become law.

The tycoons win Round One

Meanwhile, the tycoons and their representatives won a round yesterday when the Knesset Economics Committee rejected a proposal (declarative in value, nothing more ) to accept the Sheshinski recommendations. Sheshinski also proposed that the committee support extending the recommendations on taxation to existing gas discoveries (Tamar, Tethys Sea ), not only to new discoveries such as Leviathan. Nothing doing.

The proposal was made by Carmel Shama-Hacohen (Likud ), and won support from Yachimovich and Dov Khenin (Hadash ).

Following the nay vote, Shama-Hacohen said the outcome was a red alert for the prime minister and finance minister: They needed to counter the forces of the lobbyists and tycoons.

During the discussion, an argument erupted between Yachimovich and Yulia Shamalov Berkovich (Kadima ), which reached the point of mutual accusations and shouting. Yachimovich claimed the discussion was turning into a "hostile hearing" for the Finance Ministry officials behind the demand for higher royalties. Shamalov Berkovich rebutted that all Yachimovich cared about was getting her picture in the newspapers. "You only represent Shelly Yachimovich," she accused. Yachimovich didn't respond, only later commenting that Shamalov Berkovich's accusations were farcical.

The companies exerting pressure include Yitzhak Tshuva's Delek Group, which is exploring for gas and oil through a number of companies, the U.S. firm Noble Energy and Ratio Oil Exploration. At the top of their list of targets is Netanyahu, who will be meeting next Monday with Finance Minister Yuval Steinitz, National Infrastructure Minister Uzi Landau and leaders of Delek, Noble and other companies. Netanyahu hasn't stated his position yet but Knesset sources think he'll have to find a compromise between Steinitz, who argues for higher royalties, and Landau, who opposes the idea. It seems the members of Yisrael Beiteinu oppose the Sheshinski recommendations. The positions of the Labor and Likud ministers is not known and in Kadima, opinions are mixed.