Antitrust Authority director general David Gilo today responded to the Ministry of National Infrastructures, Energy and Water, which criticized him for his decision to break up the natural gas monopoly. Gilo stood by his decision, and counterattcked.
Gilo expressed surprise that the Ministry of Energy had not taken a position in principle until he had intervened, saying, "You completely refrained up until now from expressing a position in principle on the outline in the consent decree, even though it involved the most momentous event in the Energy Ministry's history. Now, you are complaining about our decision to change this outline, and in effect are supporting the arrangement that had been proposed."
The Ratio Oil Exploration (1992) LP (TASE:RATI.L) share, which rose today in morning trading, reversed direction following Gilo's answer.
Gilo added that the Ministry of National Infrastructures, Energy and Water director general's letter "expressed a stance giving top priority to preventing the threat that the monopoly in Leviathan will not develop the reservoir, even if it means subjecting the entire Israeli economy to an intimidating gas monopoly likely to control most of the economy's energy sources for many years. With all due respect, I completely disagree with this attitude. The Israeli consumer deserves not just natural gas. He deserves natural gas at a competitive price, and he deserves a competitive gas industry."
Gilo asserted that he had the authority to rule that the agreement between Delek Group Ltd. (TASE: DLEKG) and Noble Energy was a cartel, trade, saying, "Having reached the conclusion that the agreement formulated does not meeting these basic criteria, and is not consistent with the public interest, for which I am responsible, I have no intention of letting it go forward."
Gilo further claimed that the Ministry of National Infrastructures, Energy and Water had the authority to promulgate measures that would move the Israeli gas industry forward. He listed five powers he thought should be exercised:
1. The authority to order the construction of infrastructure that will facilitate an increase in the capacity of the Tamar reservoir;
2. The authority to promote a solution for storage of natural gas from the Tamar reservoir at Yam Tethys;
3. The authority to require the owners of the Tamar lease to set up a natural gas pipeline from Tamar to the Ashkelon region in order to bolster the reliability of the gas supply, in accordance with Cabinet Resolution No. 442, dated June 23, 2013;
4. The authority to require license holders who have already discovered gas to develop the reservoirs in order to produce natural gas, under the authority vested in the Israel Petroleum Law. To the best of Gilo's knowledge, these discoveries include the Shimshon, Karish, and Tanin discoveries;
5. The authority to demand that a prospect owner take action to produce natural gas in commercial quantities in the area of his lease within a specified time by exercising enforcement authority under the Israel Petroleum Law. For example, the Dalit reservoir was already defined as a prospect on December 2, 2008, but no commercial production activity has taken place in it yet.
The Ministry of National Infrastructure, Energy, and Water said in response, "We regret that the Antitrust Authority unexpectedly decided, without any consideration by the government of the consequences of its action, to reverse its previous decision. We do not intend to bandy words with the Antitrust commissioner; we will offer real, responsible, and professional solutions in order to move the natural gas industry in Israel forward."
Published by Globes [online], Israel business news - www.globes-online.com - on December 28, 2014
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