The interview with Jack Grynberg, the Colorado oil magnate, was held a few hours before the Polish-born Jewish-American was to board a flight to Athens, where he is suing the Greek government for nationalizing his drilling concerns in the Aegean Sea.
Grynberg told me an American security detail was meeting him in the Athens airport because of the threats he has received over the legal battle. “My wife insisted,” he claimed while trying to explain the “bodyguard."
The suit against the Greek government is merely one of many international arbitrations and legal proceedings that Grynberg leads across the world against governments, institutions, and conglomerates like Shell, British Gas (BG), British Petroleum (BP), Exxon over what he alleges to be the wrongful appropriation of his concerns in the oil and natural gas sectors, as well as dealings in carbon monoxide manufacturing (used in the discovery of oil fields and in which Grynberg claims to be the third largest player in the US).
But it doesn’t stop there. He petitions courts not only over his own rights. In one example, Grynberg is in the midst of a rare claim under the US False Claim Act, which allows a private individual to sue on behalf of the state. The oil magnate submitted a document in which he detailed no less than 66 violations by the oil and gas industry against the states in which they were operating.
His petition was denied at the first hurdle, but Grynberg remained positive. In a similar suit against an individual firm, the court ordered the firm to pay several million dollars’ worth of compensation; in his current suit, he is working on an appeal.
Given that the ongoing proceedings involve a fair share of the oil and gas companies in the US, Grynberg believes the damages could be reach several billion dollars.
Now with a long wake of trials behind him Grynberg is landing himself in an Israeli court with a NIS 25 million suit against the state, the minister of infrastructure and energy, the ministry’s director for oil affairs, and an advisory council.
The damages Grynberg is seeking may be low for his standards, but the claims in the suit are interesting precisely because the Colorado oil magnate has been intimately familiar with the industry for decades.
Since 2000, Grynberg has been claiming through his legal representative Marc Zell he has applied for oil exploration permits, with more than four decades of experience and the proven financial resources to complete the task, but was denied for a variety of reasons.
First, Grynberg was told he lacked experience in drilling deeper than 500 meters though he had explored wells 7 kilometers or longer.
Then, the minister decided to close off Israel’s open seas to oil exploration. But as he tells it Grynberg petitioned the High Court of Justice to reopen the Mediterranean’s waters.
Later, Grynberg explained, he was given a conditional license, which included such severe restrictions on the timeframe for exploration that the endeavor was impossible. “The plaintiffs have been mistreated and marked as unworthy of the permits. Only a small number of companies and oligarchs are allowed entry into the ruling elite; the plaintiffs, which are not part of the club, never received the appropriate attention to their requests,” the lawsuit alleges.
G: Why would you be rejected?
“I did not have the right connections. I had more experience than Tshuva (owner of the Delek conglomerate and co-owner of the Tamar and Leviathan oil developments). I had drilled in 31 sites across the world, including for gold in Kamchatka. I had discoveries in Greece, Kazakhstan, Cypress, Cameroon, Turkey, the Aegean Sea, and the Dead Sea. I was well versed in the geology of the area and I had experience drilling in the region.
“If that wasn’t enough, I have a master’s degree and a doctorate in petroleum engineering, I lecture on the topic all over the world, and I’ve even represented the US on a variety of international deliberations on oil and gas. In other words, I have the education and the experience. But there is one thing I don’t do bribes.”
Are you alleging bribery?
“I don’t know about bribery. I know there is a lot of confusion in the government’s oil and gas policy and it is fairly clear that the people in charge don’t know what to do about it. After I made that claim [in the suit], the state comptroller reinforced the statements.
“I testified in front of the US Congress that the gas industry in America steals oil and gas, up to 33% of it. It is similar in many places, except for Canada, where it is all legitimate.”
Are you staying this “theft” that occurs in the US can also happen here?
“Correct, and unfortunately Israel does not have the expertise and the capability to monitor this. Maybe that’s why they didn’t want me.”
Building up from $27
The 83-year-old Grynberg a Holocaust survivor was born in Poland and joined the partisans in the forests of Belarus at 12. At the age of 16 he arrived on the shores of Mandatory Palestine, “faked” his age to 17, and joined the Etzel. Long after, he would receive a medal of recognition for his service from that period by the Ministry of Defense.
After the establishment of the state, he left for the US, “with $27 in my pocket.” Once in America, he decided to follow in the footsteps of his father and grandfather, choosing to become an engineer. He studied at the Colorodo School of Mines, a leading institute in the field.
After his studies, Grynberg began working in the mining industry; but the biggest change in his career happened after he insisted to drill in a well that was deemed dry in Wyoming. He continued drilling and struck oil.
Today he has 900 wells across the world and his assets are valued at $5.5 billion. “Not bad,” he laughed, “considering I started with $27.”
His motivation to drill in Israel, however, is based on more emotional reasons. “I saw the Altalena,” he recalled, remembering the infamous day on the beach, when he stood with several armed Etzel members watching the ship sink and following orders not to fire.
“That sea, that took those people, is the sea in which I want to drill, the sea which now brings us gas. There is symbolism to it, things coming full circle.”
In the suit he filed, Grynberg uses his ties to Israel as one of his central decisions to drill here, claiming he submitted applications in 2000 and again in 2006, which he believed would be competently considered but that, he said, did not happen.
Let’s talk about the lawsuit. Tshuva is part of “an insider club”? He wasn’t born to a historic or rich family; he made his own fortune through hard work, and fought even harder to achieve everything he has achieved.
“Maybe that was the case in the beginning, when he took over Delek. But when he received the gas licenses, he was already wealthy, established, and popular. But it is clear that he has no experience in the field. I, on the other hand drilled 900 wells all over the world.”
Tshuva partnered with Noble, which has many years of experience and expertise. Is that not enough?
“I also work with Noble in a gas field in Colorado, where we are 50-50 partners. I am not accusing Noble of misleading, but I have the technology and the capital. If I had received the licenses, I could have explored much earlier, many years earlier, and the state wouldn’t have needed to purchase gas from Egypt.”
What do you think of the focus on the price some $5.5 per thermal unit which was widely discussed recently because of the struggle against the natural gas framework agreement?
“If I had received a license to drill here, the price would have been lower. In the US, I sell gas for $2.5 per energy unit. Maybe I would have sold at $4, but certainly not at $5.5. It would have been faster and cheaper.”
One of the claims made both by the state and by Noble is that companies do not want to come here, and therefore there is no need to consider increasing the competition, as there are no takers.
“I wanted to come. I have $3 billion cash, I receive money every month from British Gas as compensation, I have no debts. But it feels like the right hand has no idea what the left is doing. The result of the government’s policy, or more appropriately, lack of policy, is monopoly. And it doesn’t have to be that way. Look at the gas field in Egypt, where the discovery was larger than all the finds in Israel; several of the biggest firms in the industry are there.”
Do you know of companies that want to enter the Israeli market?
“Besides me? There are several Canadian and American organizations there is no shortage but the game needs to be fair. When the state does not know what it is doing, the playing field cannot be fair. The companies with experience are rejected and those without it are not.”
What’s the bottom line is this a case of confusion or corruption?
“I don’t know. We’ll find out.”
Published by Globes [online], Israel business news - www.globes-online.com - on November 15, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015