Steinitz: Develop Tamar – or give it back

Without mentioning names, Steinitz told the oil and gas exploration companies: “You’ve crossed the line. The witch-hunting of Sheshinski is beyond the pale and intolerable."

December 13, 2010 22:50
2 minute read.
Illustrative photo

311_offshore oil well. (photo credit: Associated Press)

Finance Minister Yuval Steinitz on Monday strongly defended the government’s policy on its natural resources and warned energy companies not to delay their work.

Speaking at the Globes Israel Business Conference in Tel Aviv, he reacted to the announcement by the Israeli partners in the Tamar gas license – Delek Group Ltd., Isramco Ltd. and Dor Alon Energy in Israel (1988) Ltd. – that they might delay development of the Tamar natural-gas field, saying they had two choices: either develop it or return the license to the state.

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“Anyone who receives a holding to a natural resource of the State of Israel must treat it with awe and reverence,” Steinitz said. “It is unacceptable that anyone who receives a holding to a natural resource of Israel should use it to pressure the State of Israel. It’s improper and maybe even illegal. No one can use the fact that he has a license to a natural resource of Israel to dictate to the country’s leadership. So either use the gas resources, or give them back to the state.

“We will not accept someone holding a license to a natural resource and delaying its development until all matters are clarified. I call on all the parties to develop as fast as possible the fields, and if there is a problem with financing – turn to us.”

Steinitz dismissed the harsh criticism by oil and gas exploration companies to the Sheshinski Committee’s interim recommendations to raise taxes on future revenue from oil and gas discoveries.

“This is the time. It should have been done long ago, as in all Western countries,” he said.

“The companies’ tax is going down and will fall further. Other countries that cut the companies tax did so while simultaneously raising oil and gas royalties. We’re the only ones for whom this is forbidden? After ignoring the flaw for 60 years, the State of Israel finally decided to review its royalties regime. How can anyone object?”

Steinitz said Israel had finally appointed a professional committee, with members who do not have industry interests, to examine the matter. The Sheshinski Committee will soon submit its final report.

"What’s all the shouting about? In Western countries, these measures were taken 30 years ago,” he said. “When a country discovers that its share of natural resources is lower than other countries, and is effectively zero after deducting the companies’ tax, it’s forbidden from making a change?” “I want to remind you all that the most objective parties, including the Bank of Israel and the IMF, welcomed the committee’s interim report,” Steinitz said. “The IMF said that Israel should equalize its royalties on natural treasures to Western norms. The OECD secretary general, who visited here and who does not belong to the local political swamp, said that if Israel were a proper country, it shouldn’t surrender to pressures and should raise taxes and royalties to equalize them to Western levels. What’s true for the US, Canada, Australia and Norway, is also true for Israel.”

Without mentioning names, Steinitz told the oil and gas exploration companies: “You’ve crossed the line. The witch-hunting of Sheshinski is beyond the pale and intolerable. It’s wrong in a democratic country to try to break a committee and the man who heads it.”

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