Deri leaning towards wait for new antitrust commissioner to approve gas deal

Economy Minister Arye Deri is unlikely to use his authority to approve the government's gas deal by circumventing an antitrust commissioner and plans to wait for a new one to be appointed next month.

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August 26, 2015 12:20
Hadera

A man points as he stands on a tanker carrying liquified natural gas, ten miles off the coast from Hadera. (photo credit: REUTERS)

 
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Economy Minister Arye Deri is unlikely to use his authority to approve the government’s gas deal by circumventing an antitrust commissioner, and plans to wait for a new one to be appointed, he said in a briefing to the Knesset Correspondents’ Association on Wednesday.

Deri could have signed what is known as Article 52 – which would circumvent the antitrust commissioner’s objections if there were national security or foreign policy concerns – months ago, but he has been hesitant to make the unprecedented move.

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In recent weeks, he said that he would sign Article 52 as long as the Knesset approved the planned natural gas industry structure. However, he indicated Wednesday that he’d had a change of heart – a day after Knesset Legal Adviser Eyal Yinon said the outline could be brought to a plenum vote despite the fact that it is not a bill and that there is no existing framework for doing so.

“I’m still not signing Article 52... I think that if we waited so much time already [to approve a plan, since gas was first found in 2010], and there will be a new antitrust commissioner soon, we can wait more,” he said. “I want the new commissioner to sign off on it.”

Soon-to-depart Antitrust Commissioner David Gilo threatened last year to declare the gas plan a “restrictive agreement” because of Delek Group’s and Noble Energy’s market dominance. Nearly eight months of negotiations between the gas companies and government officials ensued, resulting in a compromise outline. Gilo submitted his resignation four months ago, but it only takes effect this week.

Deri said the situation of having a lame-duck commissioner for four months was mismanagement on his part; he chalked it up to being overly considerate of Gilo’s feelings and to not having been a minister for many years.

The committee that will choose the next antitrust commissioner has not yet been appointed, but the selection of a new commissioner is expected in the next month. Deri vowed that the committee’s meetings would be transparent, with public protocols.

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Antitrust Authority Legal Adviser Uri Schwartz, whom Deri appointed to fill Gilo’s position temporarily while he seeks a permanent replacement, has said in closed discussions that he does not intend to advance the gas outline during the transition period.

For a new antitrust commissioner to approve the outline, he or she would have to review the document thoroughly, conduct public hearings that could last for months and then submit his or her consent decree to the Antitrust Tribunal for a final decision.

A source in the energy sector said that if Deri refused to sign Article 52, it could take a year to a year and a half for a new antitrust commissioner to approve the deal and for it to go into effect.

Though Deri is no longer conditioning the enactment of the government plan – which aims to regulate the pumping and distribution of gas from the Tamar, Leviathan and other offshore natural gas reservoirs – on the Knesset’s authorization, he expressed hope that it would get parliamentary approval.

“I don’t know if the Knesset will authorize [the gas deal] or not – that’s the prime minister’s decision – but if it does, that will be even better.... It will give the commissioner support when he enters the job,” Deri said.

The economy minister said he was certain that the gas outline would get the support of most MKs, because he had spoken to Yisrael Beytenu chairman Avigdor Liberman, a close ally, on Monday, and Liberman had said his party, which has six lawmakers and is in the opposition, would vote in its favor.

There had been concerns as to whether the coalition could get a majority. Three ministers – Finance Minister Moshe Kahlon, Construction Minister Yoav Galant and Welfare and Social Services Minister Haim Katz – have recused themselves from any votes related to the outline, citing conflicts of interest, as each has financial connections with companies involved. This leaves the coalition with only 58 votes to the opposition’s 59. Yisrael Beytenu’s support tips the scales in the coalition’s favor.

Knesset Economics Committee chairman Eitan Cabel (Zionist Union) responded to Deri that he remembered the minister voting in favor of the gas plan in the cabinet.

“The time has come for [Deri] to stop his searches for a ladder to climb down [from his acquiescence to the plan] and decide to be who he says he is – the representative of the poor in the Knesset,” Cabel said. “First he demanded the Knesset plenum’s authorization to sign Article 52, and now he is lifting his eyes toward the appointment of a new antitrust commissioner.”

According to Cabel, Deri’s and Netanyahu’s “parliamentary pyrotechnics... are meant to create a nice wrapping for a bad product and allow Arye Mahlouf Deri to look good at the end of the story.

“Arye, represent your voters and not the gas companies’ interests!” Cabel demanded.

The latest version of the compromise outline, which the cabinet approved on August 15, focuses on pricing, the development of the Leviathan reservoir and ensuring stability – in addition to previously agreed-upon points regarding the Tamar reservoir, several smaller basins, exports and other issues.

For electricity producers, the outline sets a gas price based on an average of the three least expensive contracts today – those of three independent power producers. By the beginning of 2016, the gas price would be about $4.70 per million British Thermal Units (mmBTU), with linkage to market changes.

The document stipulates that Delek Group subsidiaries Delek Drilling and Avner Oil Exploration must exit the 282-billion-cubic- meter Tamar reservoir within six years, while Noble Energy could remain the basin’s operator but dilute its shares. However, the companies would all need to sell their holdings in two much smaller offshore reservoirs, Karish and Tanin, within 14 months.

With regard to the 621-b.cu.m. Leviathan reservoir, the outline says that within two years, the gas companies would need to show investment commitments of at least $1.5 billion in the basin, and within five years, commitments of at least $4b. In return, the government would promise the companies 10 years of stability regarding their contracts, the outline adds.

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