As things stand now, Prime Minister Benjamin Netanyahu will reportedly approve the final Sheshinski recommendations without changes, regardless of any final discussions to be held.
Netanyahu, belying earlier reports, has scrupulously taken care not to hold meetings only with interested parties, but has asked government officials to join him. All the persons present in the first meeting were also at the second meeting with Delek Group Ltd. (TASE: DLEKG) controlling shareholder Yitzhak Tshuva, Delek Energy Systems Ltd. (TASE: DEOL) chairman Yoram Turbowitz and CEO Gideon Tadmor, Noble Energy Inc. (NYSE: NBL) chairman and CEO Charles Davidson, Alon Israel Oil Company Ltd. chairman David Weissman, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) controlling shareholder Jackob Maimon, Prof. Yitzhak Swary, and others.
At the meeting, Minister of Finance Yuval Steinitz said that, for security reasons, Israel cannot permit itself to forego money from royalties on oil and gas sales. Netanyahu asked whether this would delay development of the Tamar natural gas field, and whether it would be profitable. He concluded his remarks by saying that he would study the matter before making a decision.
The main issue is whether to exempt the Tamar field from the new tax regime. Netanyahu will reportedly not decide until hearing the arguments from all the parties involved.
Aides to Governor of the Bank of Israel Prof. Stanley Fischer decline to comment on his position regarding the Sheshinski recommendations.
Earlier today, Netanyahu met Steinitz, Minister of National Infrastructures Uzi Landau, and Minister of Environmental Protection Gilad Erdan, who was summoned to the meeting only on Friday. Steinitz opposed his presence.
Two weeks ago, Erdan told "Globes", "The state can definitely make retroactive tax changes, but I think that it's a bit unfair and unpleasant to change the rules for businesses that took risks in coming here." He is deeply concerned that not exempting Tamar will delay the flow of natural gas to Israel and force it to continue using more polluting coal and heavy industrial oil to generate electricity.
On the other hand, sources inform ''Globes'' that, on Sunday, Steinitz told Erdan that there was no alternative to developing Tamar, and that the new rules includes substantial easements for the companies developing the field to ensure the flow of gas by 2013. Ministry of Finance sources told "Globes" that Erdan understood this. Erdan declined to comment.
Sources also said that the gas exploration companies are considering launching a campaign against Steinitz, something they have refrained from doing until now. The basis of the campaign will be signed documents by Steinitz in which he explicitly says that the Sheshinski recommendations would not apply to Tamar,
The sources said that the campaign will be in response to Steinitz's remarks today, in which said that it was "impertinent to demand the exemption of Tamar". The sources said that the Tamar partners - Noble Energy, Delek, Isramco, and Alon Group - have invested more than $1.3 billion in its development, of which $800 million (over 60%) was invested after they were told that Tamar would be exempted from the Sheshinski recommendations, and even before the committee was established.
Published by Globes [online], Israel business news - www.globes-online.com - on January 11, 2011
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