‘Bureaucracy risks deterring investments in natural gas,' industry leader says

Eilat Ashkelon Pipeline Co. CEO Yossi Peled says due to red-tape, Israel at risk of falling behind competitors.

November 20, 2013 02:41
2 minute read.
Leviathan holds 453 billion cu.m. of gas.

Leviathan 521. (photo credit: Albatross)


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The bureaucratic impediments plaguing Israel’s natural gas sector deter foreign investment and put the country at risk of falling behind potential competitors such as Lebanon, an industry veteran said at a conference Tuesday morning.

“Time is not on our side,” Eilat Ashkelon Pipeline Co. CEO Yossi Peled said. “And I’m saying this as an understatement because it’s actually worse than that.”

At the Israel Energy and Business Convention in Kfar Hamaccabiah, organized by Eco Energy, Peled, a former major-general, said that unlike Israel, other countries around the world “are not just sitting around and waiting for all the decisions to be made by regulators.”

The bureaucracy involved with exploring and developing energy resources in Israel is often so complicated, he said, that foreign companies may be more inclined to take their business elsewhere. But he said that in order for exploration and production to advance, such foreign investment is needed here.

The waters belonging to Lebanon present an increasingly attractive choice for exploration, Peled said.

“It’s no secret that they’re also having explorations,” he said. “It’s quite probable that there will be gas found on the shores of Lebanon.”

Already 32 international companies are in the process of negotiating with the Lebanese government, Peled said. Presumably, he explained, these companies are under the correct impression that “the bureaucracy they will face will not be as entangled as ours.”

One company that has faced these entanglements is Noble Energy, the largest of the partners in the exploration of the Leviathan reservoir off Israel’s coast. The Atwood Advantage deepwater drilling ship that the company commissioned is sitting idle at a dock in Korea, rather than exploring the gas and potential oil of Leviathan, allegedly delayed due to a variety of bureaucratic impediments.

Peled stressed, however, that it is crucial to develop Leviathan as a strategic site immediately. Pipelines must be constructed, gas reception facilities must be built and regional export agreements with neighboring countries must be signed, he said.

Israel’s energy resource reality has undergone significant changes for the better in recent years, Peled said, but added, “I’m not sure we can say we are making the best use of this reality change.”

Executives from the companies involved in the explorations echoed Peled’s comments, emphasizing that the government should help to remove the regulatory barriers currently hindering the further development of Leviathan.

“To increase competition in supplying gas to Israel, we must make it easier for international majors to come here,” said Yigal Landau, CEO of Ratio Oil Exploration, which holds a 15 percent stake in Leviathan. “Big international companies will not come to Israel if they are limited to licenses only. If they have a broader economic horizon they will come here.”

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