Israel gas plan makes the best of limitations, official says

ALISA ODENHEIMER

TEL AVIV (Bloomberg) -- Israel’s proposed guidelines for regulating its natural gas reserves are the best it can hope for because the local industry can’t support competition, a senior government official said.

“There won’t be competition at this stage, no matter what,” Amit Lang, director-general of the economy ministry, said in an interview Monday at a Tel Aviv conference. “And I’m not that bothered about it, because there are private investors, and they found the gas.”

The plan, he added, “is the lesser evil.” Lang said he was expressing his personal opinion and wasn’t speaking on behalf of Economy Minister Aryeh Deri or the ministry. The former Israeli judo Olympian specialized in energy policy during an earlier stint at the finance ministry.

The government’s efforts to set the country’s gas policy have run into opposition from critics who say the proposal creates a monopoly and will cost Israeli consumers too much money. Antitrust Authority chief David Gilo tendered his resignation in protest and thousands demonstrated in Tel Aviv over the weekend against the plan.

Supporters of the proposal say Israel would have a hard time attracting more investors to carry out the specialized kind of drilling offshore fields require. Parliament is scheduled to vote Monday on a step to move the program along.

Investor Interest

Arguments over policy have stalled the development of Leviathan field, the largest reserve, held primarily by Houston-based Noble Energy Inc. and Israel’s Delek Group Ltd.

The proposed framework provides regulatory certainty for the future, which means other companies will be more likely to explore for other gas fields, Lang said. That could lead to true competition 10 or 15 years from now, he said.

The plan also requires Noble and Delek to sell their entire holdings in the smaller Karish and Tanin fields. Lang said he received an inquiry Monday from a company interested in buying the fields.

“If one company is interested, there are probably others interested as well,” he said.