Leviathan Investment Foils Critics’ Predictions

YERUSHALAYIM -
The Israeli Tamar gas processing rig 18 miles off the Israeli coast of Ashkelon. Noble Energy and Delek Group are the main partners there and in the Leviathan field. (Moshe Shai/Flash90)

The formal decision a few days ago of the Leviathian gas field partners to invest $3.75 billion in development has demonstrated that critics of the field’s owners who predicted they would never follow through with a substantial investment have been proven wrong, a columnist with Globes wrote on Wednesday.

Furthermore, writes Amiram Barkat, those who accused the executives of Delek Group and Noble Energy of bad faith, that they would never actually produce gas there, have so far refused to admit they were wrong.

“The interest of the Leviathan owners is not to develop the reservoir, because they want to get as much money as possible out of Tamar. There won’t be anything, because there is nothing. It’s nothing but PR. The state should nationalize Leviathan and bring it back to state management, and put an end to this farce, in which Noble Energy and Delek Group controlling shareholder Yitzhak Tshuva do whatever they want with our gas,” he quoted Israeli journalist Alon Nisser as saying, on January 19.

Nisser and others had accused the developers of stalling on the reservoir for various reasons — to extract more tax breaks, to delay until global prices rise, or to protect the near-monopoly position of the Tamar gas field (which they also have stakes in).

Barkat admits that he was one of the skeptics but that the final investment decision (FID), filed with the Tel Aviv Stock Exchange, to develop Leviathan by the end of 2019 vindicates the companies.

Barkat remains critical of some aspects of the deal they struck with the state. He says that former Minister of Environmental Protection Avi Gabai was right in arguing that the gas could be marketed for much less than the companies have proposed. However, this is mitigated by the fact, which critics fail to mention, that “half of the price of gas is collected by the state in taxes, royalties, corporate tax, and in the future, in excess profits tax…”

The “fanatics” will go on claiming that the state “surrendered” to the gas monopoly and shortchanged the Israeli taxpayer. But their objections are influenced by opposition politics which finds fault with every and any policy of the Netanyahu government, and which believes the worst about large corporate entities, even when the facts indicate otherwise.

Barkat still thinks it would have been better had the state followed the successful Norwegian model in building its own marine gas infrastructure rather than allowing outsider profit-seekers to do it.

“This argument, however, does not alter the fact that the model of a partnership between the state and the developers, as outlined by the Sheshinski Committee and continued in the gas agreement, is working.”