"I would caution against declaring Israel as an oil and gas great power. We don’t have the reserves of Qatar or Russia, and we don’t have the oil of Iraq. We have quantities that a country of our size should exploit," Gulliver Energy Ltd. (TASE: GLVR) chairman and former Mossad chief Meir Dagan told "Globes" in an interview.
Dagan added, "It is a fact that natural gas discoveries were made in the Mediterranean years ago, at Yam Tethys, and before that offshore from Gaza. There's a reasonable chance that energy sources will be found offshore from Israel, and we should explore wherever possible. Israel is not rich in resources, and if it's possible to free the economy from its dependence on foreign sources, that's a blessing, which is why we should exhaust the exploration."
Meir Dagan (67) is an exception to the top defense establishment officials who at their retirement parachute into politics or executive posts at large corporations. Instead, he took a position at a small gas exploration company with a market cap of just NIS 85 million.
"Globes": Why did you choose to enter the gas exploration industry?
Dagan: "After almost 50 years in service of the country, I made a strategic decision no to go into defense activity. Economics is a factor in Israel's security, and since I decided that defense was out, other markets became available."
How did you end up at Gulliver?
"After I retired from the Mossad, a mutual friend introduced me to [Gulliver CEO] Abraham Kremien. Our meeting turned into a discussion about energy in Israel and went on from there.
Gulliver owns the offshore Gulliver exploration license, a strip ten kilometers offshore between Tel Aviv and Haifa. The company acquired the operations of Ginko Oil Exploration Ltd. and entered the TASE through a reverse merger with stock market shell Urieli. The company's officers sought public figures to give it a boost, and its board of directors includes Dagan, former Bank Hapoalim (TASE: POLI) CEO Zvi Ziv, and former Labor Party minister Raanan Cohen.
Gulliver's subsequent rights offering was only partly successful, raising NIS 15.2 million, and, due to a lack of resources, it was forced to give up its rights to the onshore Shahar license, which has an estimated 41 million barrels of oil with a 12% geological chance of success. Drilling an exploratory well would cost $10 million, and, given the low probability of success, the company decided to focus on its offshore license.
Dagan is not paid as chairman of Gulliver; his only compensation is options converting into 1.75% of the company. The options have a strike price 25% higher than the current share price, with a theoretical value of NIS 700,000.
Former IDF chief of staff Lt.-Gen. (res.) Gabi Ashkenazi also decided to enter the gas exploration business, and was appointed chairman of Shemen Oil and Gas Resources Ltd. (TASE: SMOG). He has much better salary terms than Dagan - a monthly salary of NIS 100,000 and options with a theoretical value of NIS 15.5 million - for a 75% position. Shemen Oil owns licenses offshore from Ashdod.
What is your opinion about executive salaries in Israel?
"I see a difference between private companies and public companies, where the real owner is the public. As a world view, public companies should have some kind of coefficient… between the salary and results. If the company fails, its executives should not make huge salaries; if it succeeds, they should get fair compensation.
Although Dagan has eschewed politics, at least for now, he is establishing a public movement aimed at changing Israel's method of government. "This is not a movement that is engaged in a single party or platform," he says. "We're engaged in the method and how government operates, which are very problematic. I think that part of this method should be changed."
What problems do you mean?
"The current government has 29 ministers and seven deputy ministers, nearly all of whom are MKs. Although Israel has separation of powers, in the current circumstances in which almost 40 people simultaneously work in the executive and legislative branches, instead of separation of powers, you have a blending of powers."
Published by Globes [online], Israel business news - www.globes-online.com - on January 15, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012