Antitrust Head Under Pressure To Compromise on Gas Monopoly

YERUSHALAYIM -

Antitrust Authority director general David Gilo has come under pressure from within the Israeli government to ease demands to impose more competition on developers of the offshore natural gas fields, Globes said on Tuesday.

Antitrust Authority legal advisor Ori Schwartz and chief economist Assaf Eilat are lobbying with Gilo to go along with a compromise proposed by state regulators for the structure of the natural gas sector, according to informed sources.

Gilo’s insistence on a breakup of Noble and Delek holdings, in which he revoked prior agreements, precipitated a crisis with the companies, slowing development of the fields and raising concern among international energy investors about Israeli policy.

Last week, the regulators, including the Ministry of National Infrastructure, Energy and Water Resources, the Ministry of Finance, and National Economic Council, presented a fresh compromise proposal to break the impasse.

Instead of ordering a restructuring of the sector, the partners will not have to compete with each other to sell gas from it (no separate marketing), but the price of gas in future contracts will be loosely controlled, Globes reported.

Gilo stonewalled the regulators, however, saying that he would not endorse a formula  that did not require the companies to compete with each other in the Leviathan reservoir, and which would not force Noble Energy to divest of ownership of both the Tamar and Leviathan reservoirs.

Gilo’s office released a statement saying: “No one at the Antitrust Authority thinks that the emerging proposal will lead to real competition. In any case, the Antitrust Authority does not comment about internal discussions.”

However, it now appears that Gilo could be bypassed. Prime Minister Netanyahu is already promoting a national projects bill for energy, transportation, infrastructure and housing, which is aimed at facilitating the safe passage of major projects through the bureaucracy. In other words, without Gilo’s approval.

In addition, the gas partners and the regulators are citing Section 52 of the Restrictive Trade Practices Law, which authorizes the minister of the Economy, after consultation with the Knesset Economics Committee, to grant an exemption for a restrictive practice “if he believes that this is required for reasons of foreign policy or national security.”

Given the importance of developing the natural gas sector for the Israeli economy, it appears more and more that a way will be found to make life easier for Noble Energy and Delek.