Israeli Natural Gas Cartel Seeking Testimony From Top Treasury Officials About Gas Deal

Noble Energy fighting class action suit over gas prices agreed between cartel and Israel Electric Corporation

File photo: An aerial photo of the Tamar natural gas rig, located 90 kilometers west of the city of Haifa, northern Israel.
AP

One of the partners in the Tamar natural gas field cartel, Noble Energy, is seeking to subpoena three senior Israeli government officials to testify in Central District Court for a hearing over a class action suit against the cartel.

The officials are Shaul Meridor – the outgoing director general of the Energy Ministry – who was chosen to head the Finance Ministry’s budget division; Udi Adiri, the outgoing deputy head of the budget division, who is slated to switch places with Meridor and be the next director general of the Energy Ministry; and Morris Dorfman, who was deputy head of the National Economic Council and now serves as head of the Health Ministry’s regulatory division.

All three played key roles in putting together the framework agreement two years ago.

According to the subpoena request filed last week, cartel officials believe these witnesses can shed light on the fact that the natural gas price in Israel was set under Israel’s authority.

The petitioners seeking approval to file a 50-billion-shekel ($14.2 billion) class action suit against the gas cartel claim the cartel abused its power in order to exact an exorbitant price for its gas from the Israel Electric Corporation. The lead plaintiff, Moshe Nizri, asserts that because of the price gouging, electricity prices will go up for all Israeli consumers.

Judge Esther Stemmer restarted the hearing of the class action suit, originally filed in 2014, after the Supreme Court rejected the cartel’s request to dismiss the request for recognizing the class action suit out of hand.

“The disagreement concerns the question of whether the gas price set in the agreement between the petitioners and the IEC is excessive and constitutes an abuse of the monopolistic power held by the petitioners,” Justice Esther Hayut, the incoming supreme court president, wrote in the ruling.

In the hearing she held two weeks ago, Stemmer hinted that the gas cartel would have the burden of proof that it has such permission. The cartel apparently got the message and decided to seek a subpoena to gather testimony from the senior officials involved in putting the gas framework deal together.

The cartel’s representatives say Meridor was involved in almost every stage of policymaking regarding natural gas, gas taxation, gas exports and implementing the gas deal. Adiri was a member of the team formulating the agreement, but the cartel’s lawyers are interested in his testimony mainly because he was a member of the Electricity Authority assembly that approved the deal between the cartel and the Electric Corporation, including the set price. Dorfman was also one of the leaders of the task force formulating the deal.

Stemmer has consulted on the matter but has yet to reach a final decision on the subpoena request. Attorney General Avichai Mendelblit informed the court he would respond to the subpoena request, but added that he would seek to file the senior officials’ testimony via affidavits to be prepared by the state prosecutor, indicating he nominally supports the request.

Their testimony is also expected to help the cartel, which claims, together with the attorney general, that accepting the class action suit is liable to cause the gas framework agreement to collapse.