US gas mogul suing Israel for NIS 25 million

The company claims that over the course of several years, the ministry consistently rejected applications to drill in areas where the reservoirs were discovered.

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July 22, 2015 06:05
3 minute read.
Israel's natural gas

Israel's natural gas. (photo credit: MINISTRY OF NATIONAL INFRASTRUCTURES)

 
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An American hydrocarbon developer is suing the government for NIS 25 million, claiming that the National Infrastructure, Energy and Water Ministry unjustifiably prevented the firm from drilling in the eastern Mediterranean beginning in 2000.

RSM Production Corporation – owned by Jack Grynberg, the Jewish-American founder and president of the Grynberg Petroleum Company – submitted the lawsuit to the Jerusalem District Court in April, releasing the complaint to the media only on Tuesday.

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The company claims that over the course of several years, the ministry consistently rejected RSM’s applications to drill in areas adjacent to where today’s Tamar and Leviathan reservoirs were eventually discovered.

Calling the refusals “puzzling,” the company also accused the ministry of leaking trade secrets to the firm’s competitors, such as maps of potential gas reserves in the eastern Mediterranean.

“In the State of Israel in general and in the Israeli energy sector in particular, the rules of the game are not fair, are unjust and serve only a small group of capitalists,” Grynberg and his company wrote in the lawsuit.

“The government authorities responsible for the energy sector in Israel not only ignore the new socioeconomic wind in the State of Israel, but, even worse, they reinforce the monopolists’ ‘club’ and provide them with a ‘cushion for empowerment.’” In contrast to ministry claims that Grynberg’s company had been unqualified to undertake the drilling in question, the firm stated that through Grynberg Petroleum Company, the CEO had overseen hundreds of successful gas drilling operations over the past several decades in North America, Europe, Africa and Asia.

The company also slammed the claims of the government and the gas firms currently operating in Israel, which have consistently stated that no other foreign corporations were interested in exploring in Israel.



According to the lawsuit, in the middle of 2000, the government first rejected RSM’s request to drill, claiming that the firm lacked sufficient knowledge of the relevant drilling depths, even though the company at the time was drilling at these depths in the Caribbean Sea. When the company appealed the decision, the request was rejected again on the grounds that Israel’s waters were closed for hydrocarbon exploration, the firm said.

Three years later, the company renewed its request, but once again received the response that the area was closed to open water searches.

This led RSM to submit a petition to the High Court of Justice, requesting that the waters be opened for exploration, according to the lawsuit. In 2006, the company filed for a permit to drill in the triangle delineated by Israel, Egypt and Cyprus. While this application was accepted, the company described the terms as “draconian,” with unrealistic and uneconomical expectations.

In response to the lawsuit, the National Infrastructure, Energy and Water Ministry said the company’s claims were “false and irrelevant.”

“The company submitted three requests for oil exploration licenses,” the ministry statement said. “Their first request was denied in 2000 because it did not meet professional requirements; the second motion was filed when the sea was closed to searches, and therefore was also rejected.”

The company’s High Court petition, meanwhile, was rejected in 2005, according to the ministry.

Although in 2006, RSM received a preliminary permit with priority rights for drilling, the firm did not meet administrative standards, and the permit was therefore revoked, the ministry explained.

“The company did not appeal and did not make legal demands against anyone about it,” the statement added. “The long period that has passed since the occurrence of the event, nearly a decade, also testifies to the company’s motives.”

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