Antitrust commissioner resigns over natural gas dispute

Regulator says government intends to speed up development of oil fields at the expense of competition in energy sector

Tamar Pileggi is a breaking news editor at The Times of Israel.

Israel Antitrust Commissioner David Gilo, March 18, 2014. (Flash 90)
Israel Antitrust Commissioner David Gilo, March 18, 2014. (Flash 90)

Antitrust Authority Commissioner David Gilo announced his resignation Monday amid an ongoing intra-governmental dispute over opening Israel’s natural gas market to increased competition.

The announcement came as Prime Minister Benjamin Netanyahu’s new government began to backpedal on a proposed plan jointly drafted earlier this year by the previous government and the authority, aimed at dismantling a potential duopoly in the Israeli gas market.

In December, Gilo ruled to void the partnership that allows its chief companies — the US-based Noble Energy and Israel’s Delek Group — to develop the Leviathan and Tamar gas sites in the Mediterranean over protests over the price at which the companies were preparing to sell gas to the Israeli economy.

Instead, the new government intends to push forward a proposal that would leave the US conglomerate and its Israeli partner as the sole operators of both offshore gas rigs.

While the revised draft would reduce Noble’s holdings in the Tamar reservoir from 36 percent to 24% within six years, and remove its veto rights in the partnership, the Texas-based company would still have the privilege of marketing gas from both reservoirs.

“My decision stems from several considerations, mostly the knowledge that the government and specifically the Prime Minister’s Office, the Finance Ministry and the Energy Ministry will do all in their power to promote the new draft on natural gas – a draft which I am certain will not bring competition to this important market,” Gilo wrote to the recently appointed Economy Minister Aryeh Deri in his resignation letter.

Gilo, who said that he intends to step down by August, asserted that the new proposal would damage the independence of the Antitrust Authority and prevent it from regulating the market.

“I believed throughout that there should be a solution regarding competition with the gas companies without resorting to the court system, because the companies threatened to cease development of the reservoirs if I turn to the courts,” he said.

“In recent weeks, I announced to the gas partnership and government ministries that I cannot be part of the recent draft, since I am convinced, as I said, that it will not bring competition to the natural gas market,” Gilo concluded.

Zionist Union MK Shelly Yachimovich, a frequent critic of Israel’s agreement with the gas companies, called Gilo’s announcement a “hit to the Israeli public” and called on him to reconsider his resignation.

Yachimovich slammed the government for catering to large companies and said Gilo’s decision to step down was “the result of a violent pressure campaign by the gas tycoons and their puppets in the government.”

In 2013, Israel decided to export 40% of the country’s offshore gas finds, in an effort to transform Israel from an energy importer to a major world player in the gas market.

Jonathan Beck contributed to this report.

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