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Israel Antitrust Commissioner Resigns on Natural Gas Policy
May 25, 2015 | Bloomberg Business
By Shoshanna Solomon
Israel’s Antitrust Commissioner David Gilo said he would step down from his position to protest a compromise framework on natural gas policy that he says will not lead to competition. -
Israeli Regulator to Resign, May Free Up Gas Explorers Noble and Delek
May 25, 2015 | Reuters
By Ari Rabinovitch and Steven Scheer
Israel's anti-monopoly regulator, who has been pushing to open the energy sector to competition, said on Monday he would step down in August, potentially lifting the pressure on exploration companies Noble Energy and Delek Group. -
Resignation of Israeli Regulator Could Ease Pressure on Energy Companies
May 25, 2015 | Energy Voice
Israel’s anti-monopoly regulator is set to step down later this year – a move which could ease pressure on exploration companies in the region. -
David Gilo was Right but Not Smart
May 25, 2015 | Globes (English)
By Amiram Barkat
The announcement of Antitrust Authority director general Prof. David Gilo's resignation aroused a storm of responses today, as is usually the case with such dramatic developments. -
SUMMARY: Everything you need to know about David Gilo’s Resignation
May 26, 2015 | The Marker (Hebrew)
By Avi Bar-Eli
Over the course of the last week, Gilo purportedly met with Finance Minister Moshe Kachlon, Economy Minster Aryeh Deri and Energy Minister Yuval Steinitz, in an unsuccessful effort to win support for his opposition to the compromise proposal backed by the government. -
Summary of Key Hebrew Opinon Pieces
May 26, 2015 | Multiple Sources (Hebrew)
In Maariv, columnist Yehuda Sharoni writes that “Gilo carried out a sophisticated PR maneuver by bringing forward his planned resignation, and ensuring full credit for his principled stand.” -
Key Quotations from Politicians
May 25, 2015 | Mutliple Sources (Hebrew)
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Antitrust Commissioner David Gilo Resigns
May 25, 2015 | Globes (English)
By Hedy Cohen
Antitrust Authority director general Prof. David Gilo today announced his resignation, after the cabinet approved an arrangement for the natural gas industry that Gilo regards as improper. -
Antitrust Chief Steps Down Amid Dispute Over Breaking Up Gas Cartel
May 25, 2015 | Haaretz (English)
By Avi Bar-Eli and Ora Coren
David Gilo said on Monday he was stepping down as Israel’s antitrust commissioner in August, decrying the interference of Prime Minister Benjamin Netanyahu and others in his efforts to break up the natural gas cartel. -
Antitrust Commissioner David Gilo to Resign in August Amid Gas Disputes
May 25, 2015 | Jerusalem Post
By Sharon Udasin
Antitrust Commissioner David Gilo announced on Monday he will leave his post at the end of August amid a disagreement with government officials over competition in the natural-gas market. -
Antitrust Commissioner Resigns Over Natural Gas Dispute
May 25, 2015 | Times of Israel
By Tamar Pileggi
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. -
PM says Gilo was Alone in Opposing Gas Draft
May 25, 2015 | Times of Israel (Blog)
Prime Minister Benjamin Netanyahu says at a Likud faction meeting that Antitrust Authority chief David Gilo was the only person who opposed the revised government draft on the natural gas market. -
Sample of Noteworthy Hebrew Tweets
May 25, 2015 | Twitter
Moshe Debby (leading Israeli PR executive; 1,497 followers): “David Gilo at Energy Conference: I understand the damage done to the market, but I reached a different conclusion to everyone else”
International Press
Israeli Press Opinion
Israeli Press General Coverage
Sample of Noteworthy Hebrew Tweets
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Israel Antitrust Commissioner Resigns on Natural Gas Policy
May 25, 2015 | Bloomberg Business
By Shoshanna Solomon
Israel’s Antitrust Commissioner David Gilo said he would step down from his position to protest a compromise framework on natural gas policy that he says will not lead to competition.
“My decision to step down stems from a number of reasons, but the foremost being that the government will do what it can to promote a framework on natural gas policy that I am convinced will not lead to competition in this important market,” Gilo, who has been in the post since April 2011, said in an e-mailed statement. He said his resignation would take effect at the end of August.
The development of Israel’s largest natural gas field Leviathan halted after Gilo said in December he was considering issuing a restriction of trade ruling on the partners in Leviathan, including Houston, Texas-based Noble Energy Inc. and Delek Group Ltd. An inter-ministerial panel has been negotiating a compromise natural gas policy framework with the companies ever since. The latest draft envisages Delek and Noble reducing their stakes in smaller offshore fields while leaving the partnership in Leviathan intact, a framework with which Gilo disagreed.
“I have informed the companies and the other government offices that I cannot be part of this latest framework,” Gilo said. “But it has been made clear to me in the past few days that the government will do all it can to promote it. I hope they will change their mind.”
Shares in Delek Group closed 3.4 percent on Monday to their highest since December 9 in twice the three-month average daily volume in Tel Aviv. The Tel Aviv Oil & Gas index advanced 1.3 percent to the highest since Nov. 27.Framework Promoted
“The resignation of Gilo means that the framework that has been talked about is that which will be promoted and that is a better one for the companies than what Gilo wanted,” Noam Pincu, an analyst at Tel Aviv-based Psagot Investment House Ltd., said by phone. “This is good for the shares.”
Prime Minister Benjamin Netanyahu, speaking after Gilo’s announcement, made it clear they had not agreed on gas policy.
“While I greatly appreciate the work of the commissioner, in this case he was the only one who opposed the framework proposed by the professional bodies,” Netanyahu said at a televised meeting of the Likud party faction meeting in parliament. “Apart from him, all the panel members supported the outlines of the proposal that will enable us to benefit from this gift of nature.”
Israel’s two largest offshore natural gas fields, Leviathan and Tamar, in which Delek and Noble are the biggest shareholders, hold an estimated 32 trillion cubic feet of gas, enough to supply the country for decades and earn export revenue. The delay has pushed off supply deadlines and endangered pending export deals, including to Egypt and Jordan.
Gilo’s resignation “is a mark of shame for the government, and especially for its head,” The Movement for Quality Government in Israel said in an e-mailed statement. His resignation spells the end of chances for competition in the gas sector and the government’s campaign to protect the “oil barons” from Gilo’s stance represents a “real danger” to democracy in Israel, the group said.
Israel Gas Plan Said to Require Noble, Delek to Sell Stakes Israeli Gas Future Turns Murky With Turnabout by Regulator
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Israeli Regulator to Resign, May Free Up Gas Explorers Noble and Delek
May 25, 2015 | Reuters
By Ari Rabinovitch and Steven Scheer
May 25 Israel's anti-monopoly regulator, who has been pushing to open the energy sector to competition, said on Monday he would step down in August, potentially lifting the pressure on exploration companies Noble Energy and Delek Group.
Antitrust Commissioner David Gilo caused an uproar in December when he ruled that Noble and Delek may constitute a monopoly over their control of two large natural gas fields Tamar and Leviathan.
In a stinging rebuke of Prime Minister Benjamin Netanyahu, Gilo, whose post is independent, said he was resigning because the government was pushing for a deal to speed up development of the gas field at the expense of bringing in new competition.
He did not, however, list details of what the deal would entail.
Tamar began producing gas two years ago, but development of Leviathan, the world's largest offshore gas discovery of the past decade, has since been frozen.
Texas-based Noble and Israeli conglomerate Delek have been negotiating with the government to find a solution over which, if any, assets they would have to sell off.
"The government, especially the prime minister's office and Finance and Energy Ministries, will do everything they can to promote the outline that is being drafted for the natural gas market - an outline I am convinced will not bring competition in this important market," said Gilo, who has been in the post for more than four years.
While not directly related, the resignation of the regulator comes as Netanyahu has been shaking up the leadership of two ministries under his control.
Last week Netanyahu dismissed the director-general of the Communications Ministry and this week the director-general of the Foreign Ministry was also let go, to be replaced by a close Netanyahu confidant, Dore Gold, a former Israeli ambassador to the United Nations.
Noble and Delek own 85 percent of Leviathan, which has with an estimated 22 trillion cubic feet (622 billion cubic metres) of reserves. Production had been expected to begin in 2018 following an initial investment in the development of around $6.5 billion
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Resignation of Israeli Regulator Could Ease Pressure on Energy Companies
May 25, 2015 | Energy Voice
Israel’s anti-monopoly regulator is set to step down later this year – a move which could ease pressure on exploration companies in the region.
Antitrust Commissioner David Gilo had been pushing to open the energy sector to competition.
Last year he caused a stir when he ruled that both Noble and Delek may constitute a monopoly over their control of two large natural gas fields Tamar and Leviathan.
According to reports, Gilo claimed he was resigning because the government was pushing for a deal to speed up development of the gas field at the expense of new competition.
Both Noble and Delek have been negotiating with the government to find a solution over which assets they would have to sell off.
He said:”The government, especially the prime minister’s office and Finance and Energy Ministries, will do everything they can to promote the outline that is being drafted for the natural gas market – an outline I am convinced will not bring competition in this important market.”
Noble and Delek own 85% of Leviathan, which has with an estimated 22 trillion cubic feet (622 billion cubic metres) of reserves.
Production had been expected to begin in 2018 following an initial investment in the development of around $6.5 billion.
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David Gilo was Right but Not Smart
May 25, 2015 | Globes (English)
By Amiram Barkat
The announcement of Antitrust Authority director general Prof. David Gilo's resignation aroused a storm of responses today, as is usually the case with such dramatic developments. Those leading the struggle against the natural gas companies shouted their outrage, the developers were delighted, the government ministers were embarrassed, and there was wall-to-wall relief among the professional echelons dealing with the gas sector.
The big bottleneck blocking progress in the energy sector is now likely to be released. Development of the Leviathan reservoir, sale of the Karish and Tanin reservoirs, construction of power stations, and conversion of industrial enterprises to the use of natural gas - all these have been waiting for a decision. The structure devised by the state and opposed by Gilo is designed to enable Israel's gas industry to continue its forward sweep.
Gilo's main struggle was not against the gas developers; it was against his government colleagues. His decision to resign came after it was made clear to him last week that he would not receive the backing of other government agencies in the expected hearing at the Restrictive Trade Practices Tribunal concerning his classification of the 2007 Leviathan deal as an agreement in restraint of trade.RELATED ARTICLESAntitrust commissioner David Gilo resignsSheshinski: Breaking up gas monopoly won't lower prices
Fear of humiliation in court led Gilo to resign. Exactly the same fear caused his dramatic decision last December to rescind the compromise plan agreed with the gas developers concerning the agreement in restraint of trade at Leviathan. At that time, nine months after he signed the compromise agreement, Gilo realized that he could not lie to the court by telling it that he had signed a good agreement that would promote competition in the gas sector.
He reached the same conclusion this time about the new compromise agreement formulated by the state. It is the obvious conclusion - that the solution is not free competition, but a different regime of supervision and regulation - that Gilo still refuses to accept. Gilo was an unusual figure on the government regulation stage: introverted, quiet, and not a politician. His decision to rescind the compromise agreement caught his colleagues completely by surprise.
"He sat in the discussions and didn't open his mouth. We didn't know there was a problem," the blockage removal team steered by Prime Minister's Office director general Harel Locker said about him. His colleagues asserted that he took only competition into consideration, without looking at the general picture. The huge damage to the gas sector that classification of an agreement in restraint of trade at Leviathan would cause includes years of delay in development of the reservoir, delaying billions in state revenues, jeopardizing strategic export deals with Egypt and Jordan, and many other things.
Gilo claimed it was not his job to look at the general picture - that was what the government was elected for. Even senior Antitrust Authority officials, however, did not conceal their different opinion, and did not hesitate to disagree with the director general behind closed doors. Gilo was left alone in his self-righteousness within the government, even though he won popularity outside it. After refusing to pull Prime Minister Benjamin Netanyahu's chestnuts out of the fire for him, he discovered the welcoming arms of the opposition and the social organizations, which saw him as the sole righteous man in Sodom, and now regard him as a holy martyr who chose to sacrifice himself on the altar of the tycoons' interests - if we could only believe it. As for us, we still think being smart is better than being righteous.
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SUMMARY: Everything you need to know about David Gilo’s Resignation
May 26, 2015 | The Marker (Hebrew)
By Avi Bar-Eli
- Over the course of the last week, Gilo purportedly met with Finance Minister Moshe Kachlon, Economy Minster Aryeh Deri and Energy Minister Yuval Steinitz, in an unsuccessful effort to win support for his opposition to the compromise proposal backed by the government. Bar-Eli stresses that “senior ministry staff” in each of these ministries apparently sided with Gilo. Additionally, Bar-Eli notes that coalition discipline has led both Kochlon and Deri to rescind their pre-election promises to break up the Delek-Noble duopoly.
- Bar-Eli reviews the key terms of the disagreement between Gilo and the government.
- Bar-Eli stresses that the government backtracked on Gilo’s plan due to concerns that implementing his program would ultimately slowdown the development of the Leviathan field, with broad economic and geo-strategic consequences. Gilo was evidently unconvinced that these considerations should overshadow his core objective of ensuring market competition.
- Bar-Eli confirms that Gilo was left with no allies for his stance among senior government decision makers.
- Bar-Eli proposes that the government should formulate the final details of the compromise agreement with Delek and Noble, which currently only exists in guideline form, and submit this to the Antitrust Tribunal for approval. In order to sidestep Gilo, who is not due to step down until August, the state will need ratification for its plan from the tribunal, or will need to wait until the appointment of Gilo’s successor (on the assumption that the successor will approve the deal).
- Bar-Eli claims that “the big winner from this situation is Gilo himself…who is resigning as a hero, loyal to his professional values.” Other winners include Noble, PM Netanyahu – who can now oppose antitrust telecoms reforms without Gilo as an obstacle – as well as Prof Eugene Kandel (head of the PM’s National Economic Council) and his deputy Morris Dorfman.
- Losers include Delek owner Yitzchak Tshuva, Finance Minister Moshe Kachlon (who has lost both credibility and a critical ally - Gilo – for his planned banking and housing reforms) and the Attorney General.
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Summary of Key Hebrew Opinon Pieces
May 26, 2015 | Multiple Sources (Hebrew)
- In Maariv, columnist Yehuda Sharoni writes that “Gilo carried out a sophisticated PR maneuver by bringing forward his planned resignation, and ensuring full credit for his principled stand.” Sharoni takes Gilo to task for his hypocrisy in taking such a dramatic change of course only during the last six months, having previously been comfortable with the government’s position. Gilo is depicted is naïve for his failure to appreciate and balance the perspectives of other players within the Israeli government.
- In Yediot Aharonot, Amir Ben-Dor commends Gilo for raising the issue of competition within Israel’s gas sector, however chides him for failing to recognize that “not everything is black and white,” and for stubbornly refusing to consider creative alternatives to reach a settlement. Ben-Dor’s analysis is akin to that of Amiram Barkat in Globes.
- In The Marker, legal correspondent Ido Baum notes that Gilo was ultimately defeated by Noble and Delek, larger and more powerful forces than his limited regulatory authority. By resigning in protest, Gilo has effectively preserved the integrity and credibility of the antitrust commission. Baum warns that “a lack of competition in Israel’s gas sector equates to granting Delek and Noble enormous power over future Israel governments, and stands to increase the cost of living in Israel.”
- Also in The Marker, Meirav Arlosoroff warns that Gilo’s resignation – alongside other recent resignations and sackings in other areas of government – are likely to deter good candidates from entering public service. Arlosoroff is severely critical of PM Netanyahu, to whom she attributes a rejuvenated sense of ambition and power-lust.
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Key Quotations from Politicians
May 25, 2015 | Mutliple Sources (Hebrew)
Shelly Yachimovich
The resignation of Prof. David Gilo is no less a bombshell. A huge blow to the Israeli public.
It is shameful that the government caters to capital holders in such a servile manner and makes its most senior regulator, the Antitrust Authority chief, who was battling gas monopoly, step down.
This the result of a violent pressure campaign by the gas tycoons and their minions in the government and I call on Gilo, a super-professional, solid, honest and esteemed person to take back his resignation. For us, for the public in Israel.
Gilo understood the obvious: It cannot be that our gas treasures will be deposited with the Tshuva-Noble Energy monopoly, it cannot be that a private monopoly holds the country by the throat and determines everything: the state’s revenue, the cost of living, the fate of industry and employment and our energy independence,
The war is not being waged against Gilo personally, but against the public. For months he stood firm, all alone against the mighty forces, protecting the public interest, and did everything he could to begin dismantling the gas monopoly.
The new government already had many plans for how to remove him from its path. They made baseless threats and fabricated and false predictions about the economic damage that his actions would cause to the economy, and many more unacceptable means of pressure.
His resignation also emphasizes how the outline drafted by the ministries is destructive and harmful. This is a farce, a program to cover one’s tracks, designed to create the appearance of a struggle and the dissolution of a monopoly, while in practice, empowering the companies and providing resources on the scale of an entire country, to a private entity.
If a first-class professional, an internationally renowned academic with a track record like Prof Gilo, preferred to resign rather than have his name attached to this plan, then his action speaks for itself.
His resignation announcement is a huge blow to the correct administration of Israel, the independence of the regulators and public officials and citizens at large. I hope you reconsider and return to the battlefield to fight - for everyone's benefit.
Manuel Trachtenberg
The resignation of David Gilo, from his position as the Antitrust Regulator is the greatest testimony to the direction of the incoming government - a government that fears acting against monopolistic behavior, but is not afraid to use its entire means against those pointing to its failures.
I regret the resignation of David Gilo, who over the past years has struggled bravely against monopolistic powers that suffocate the competition in local markets and raise the cost of living. As such Prof. Gilo systemically and successfully implemented the recommendations of the committee that he headed, that was established following the protests of 2011, which gave the Antitrust Authority powerful tools allowing for it to operate actively and not only reactively.
Even more so I regret that with its first steps, that government is choosing a path that will result in price increases instead of taking action to reduce the cost of living for the benefit of our citizens.
It is clear that in light of the government's consistent failures in the gas market,there is a real need for determining a price control mechanism. In the near future, the structural paths for change will not bring enough competition and provide a reasonable price for the consumer and industry.
Miki Rozenthal
The resignation of David Gilo - a victory for the capitalists at the expense of the public interest.
Bibi takes care of his rich friends, and fires in a systemic manner all professional civil servants that interfere with him making Israel an oligarchy of tycoons.
The public will pay the price.
Michal Biran
Here we go: David Gilo unexpectedly resigned today.
"I can no longer," he wrote in his resignation. Gilo courageously stood alone against the capitalists and their minions until he could take no more. He was delegitimized, as he fought bravely in the interest of us all.
Erel Margalit
Today, the Antitrust Regulator David Gilo resigned from his position. For the gatekeeper of public interest there was no other choice but to do something dramatic to make it clear: the Netanyahu government does not serve the public interest with regard to competition in gas, the Netanyahu government does not want, really, to dismantle cartels and lower the cost of living.
For the past four years, Netanyahu and his government has received tremendous public support for dismantling the monopolies and cartels and lowering the cost of living. For four years, no significant cartel or monopoly has been dismantled!
Finance Minister Moshe Kahlon should stop being an observer from the sidelines (as he did with the reports of the Prime Minister’s intentions to takeover communications) and inform Netanyahu that he will not be allowed to appoint a new and weak regulator to this important position. This is one of his first tests. Can he stand up to it?
Tzipi Livni
Today there were two disturbing events in two different fields - resignation and dismissal of CEO regulator.
The resignation: Antitrust Commissioner, David Gilo, was forced to resign after his case against the gas monopoly, for opening the market to competition, for the benefit of the citizens of Israel and energy security, was rejected by the prime minister - another move by Netanyahu, after a trend of domination of the media, in breaking the gatekeepers of the public interest.
Aryeh Deri
A first-rank professional and has done his job with honesty, loyalty and the highest level of professionalism
Bibi Netanyahu
I appreciate his work very much, [but] in this case he was the only person who opposed the draft offered by professional experts. Apart from him all other participants support the draft, which can help realize the present we were given by nature
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Antitrust Commissioner David Gilo Resigns
May 25, 2015 | Globes (English)
By Hedy Cohen
Antitrust Authority director general Prof. David Gilo today announced his resignation, after the cabinet approved an arrangement for the natural gas industry that Gilo regards as improper. Oil and gas stocks on the Tel Aviv Stock Exchange (TASE) are responding with rises.
Gilo said, "My decision is a result of a number of considerations, most importantly the report that the cabinet, particularly the Prime Minister's Office, the Ministry of Finance, and the Ministry of National Infrastructure, Energy, and Water Resources, will do everything they can to push forward the currently emerging structure in the natural gas sector. I am convinced that such a structure will not lead to competition in this important market, and could possibly detract from the independence of the Antitrust Authority, a matter of public importance, and harm its ability to carry out unilateral measures."
Gilo added, "I always believed that it was right to reach an out-of-court competitive solution with the gas companies because of the gas companies' threat to refrain from developing the gas reservoirs if the matter went to court. As is known, in December, I reached the conclusion that the agreed draft order then drawn up would not lead to competition, and I therefore decided not to submit it for court approval. I welcomed the participation of the other government departments in a joint effort to reach a more competitive solution.
"In recent week, I notified the gas partnership and the other government departments that I could not be a party to the recently formulated structure, because I was convinced that it would not lead to competition in the natural gas market."
Gilo further stated, "I believe that had all the government departments remained united behind a more competitive structure, there would have been a reasonable chance of eventually implementing such a structure, whether by consent or unilaterally. It was made clear to me in recent days, however, that the cabinet and the government departments would do all they could to push forward the formula devised by them during this time.
"Furthermore, this question is liable to have far-reaching effects not related to competition, such as in foreign and security affairs and energy independence. These consequences were behind the sincere concerns of the other government departments. I therefore do not think that it is fitting and proper that the regulator responsible for competition to take unilateral measures against the unanimous opposition of the other government departments, without any backing from them.
"I hope that the other government departments change their views about the structure. I will be here for the next three months, and I will be able to help, including possible use of all the authority vested in me, if I have backing from the government departments," Gilo said.
According to Gilo, "I am now finishing four and a half years of work on behalf of competition, the consumer, and uncompromising struggle over the cost of living. This is not over, and there is much work left to do. My main goals when I became Antitrust Authority director general were to make it a proactive agency, and to improve its status as an agency promoting competition and preventing monopolies from abusing their position, promoting legislation to protect the public against damage to competition, and advising government departments about the competitive consequences of their actions. I know that I am leaving to my successors a stronger Antitrust Authority dedicated to keeping watch over competition for the consumer's sake."
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Antitrust Chief Steps Down Amid Dispute Over Breaking Up Gas Cartel
May 25, 2015 | Haaretz (English)
By Avi Bar-Eli and Ora Coren
David Gilo said on Monday he was stepping down as Israel’s antitrust commissioner in August, decrying the interference of Prime Minister Benjamin Netanyahu and others in his efforts to break up the natural gas cartel.
“The government, especially the Prime Minister’s Office and the finance and energy ministries, will do everything they can to promote the outline that is being drafted for the natural gas market, an outline I am convinced will not bring competition in this important market,” Gilo said in his letter of resignation.
Gilo, who reports to Economy Minister Ayre Dery, Gilo warned in the letter that the government’s interference threatened the independence of the Israel Antitrust Authority.
But Netanyahu shot back with a defense of the government’s initiative, saying in a statement that while he has valued Gilo’s work, “in this case he was the only one who opposed a framework proposed by expert authorities.”
Gilo has been locked in a battle with the PMO and the two ministries since he ruled, in December, that Noble Energy and Delek Group of Israel’s control of the country’s biggest natural-gas fields, Tamar and Leviathan, constituted an illegal cartel.
Gilo, who has been in the post for over four years, was pushing for a plan that would have forced Noble and Delek to sell part of their holdings in the two big fields and create separate, independent and competitive channels for selling the gas from them.
The December decision reversed an earlier one that would have allowed the two companies to keep their stakes in the Tamar and Leviathan.
But the government opposed to the plan, fearing it would delay development of the fields as details of the Gilo plan were put into place and stakes in the two fields were sold. Noble announced after the Gilo decision that it was freezing investment in Leviathan until the regulatory situation was clarified.
Officials also feared that Israel’s zigzag policies would deter investors. Even top figures in the Antitrust Authority began having second thoughts about the more extreme plan.
As an alternative they have proposed much softer terms that would have dropped the demand for separate marketing channels and allowed Noble to keep its stakes in the two fields while forcing Delek to divest Tamar. Gilo strongly opposed the plan and refused to join talks with Noble and Delek in recent weeks.
Gilo said on Monday said he was confident that had the government remained united on the cartel issue it would have been possible to reach an agreement with Noble and Delek that ensured adequate competition.
In addition to supplying much of Israel’s energy needs, the offshore gas reserves have also turned the country into a regional energy power, with Jordan, the Palestinians and Egypt all agreeing to buy Israeli gas.“The [government] framework will increase competition, ensure gas is taken out of the ground instead of remaining there. It will attract investors rather than send them away and will advance importance strategic interest by supplying gas to several countries in the region,” Netanyahu said.
In fact, Gilo seemed to accept that geopolitical concerns could trump the antitrust issue. “I don’t think it is appropriate for a regulator responsible for competition to undertaken unilateral steps resolutely opposed by other government ministries,” he said in his letter.The news lifted the shares of energy stocks as investors bet that Gilo’s resignation cleared the last obstacle to reaching an agreement the cartel issues with the gas companies. Gilo was rumored to be considering going to the antitrust court or mounting a campaign with the new finance and energy minsters to accept his position.
Shares of the two Delek Group units that directly hold stakes in the Tamar and Leviathan fields rallied Monday, with Delek Drilling closing 2.4% higher at 17.65 shekels ($4.56) and Avener up 1.2% at 3.24 shekels. Delek Group rose 3.3% to close at 1,179. There was no trading in Noble, a U.S. company listed in New York, because of the U.S. Memorial Day holiday.
Tamar began producing gas two years ago, while Leviathan, the world’s largest offshore gas discovery in the past decade, is in development. Noble and Delek had been negotiating over cartel terms with Gilo before the PMO and the two other ministries stepped in.
Noble and Delek own 85% of Leviathan, which has with an estimated 22 trillion cubic feet (622 billion cubic meters) of reserves. Production had been expected to begin in 2018 following an initial investment in the development of around $6.5 billion.
The dispute inside the government remained in the background until after the March 17 general election. It comes as Netanyahu seeks to strengthen his grip over the government’s independent regulators.
Among other things, Netanyahu was threatening to form a three-member panel led by the prime minister that would be authorized to overrule the antitrust commissioner. Last week Netanyahu dismissed the director general of the Communications Ministry, whose portfolio he also holds, in what was seen as a move to gain control over telecommunications policy.
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Antitrust Commissioner David Gilo to Resign in August Amid Gas Disputes
May 25, 2015 | Jerusalem Post
By Sharon Udasin
Antitrust Commissioner David Gilo announced on Monday he will leave his post at the end of August amid a disagreement with government officials over competition in the natural-gas market.
“My decision stems from a number of considerations, primarily from the news that the government, in particular the Prime Minister’s Office, the Finance Ministry and the Energy Ministry, will do all that they can to promote the outline formulated recently in the natural gas sector – an outline that I am convinced will not bring competition to this important sector,” Gilo said in a statement to the press.
He was referring to a compromise outline presented two weeks ago to the natural-gas companies Delek Group and Noble Energy by an interministerial team – from the Finance Ministry, the National Economic Council and the National Infrastructure, Energy and Water Ministry – aimed at solving a dispute that has largely frozen new gas development since December.
Gilo said he informed Economy Minister Arye Deri of his forthcoming resignation on Monday.
The stalemate in the natural-gas sector stems from Gilo’s December 23, 2014, declaration that he would review whether the dominance of Delek and Noble in the Mediterranean gas sector constitutes an illegal “restrictive arrangement.” Although gas from the 282-billion cubic meter Tamar reservoir, located about 80 km. off the coast of Haifa, has been flowing into Israel since March 2013, development of the neighboring 621-b.cu.m. Leviathan reservoir has been unable to proceed because of the dispute.
The compromise outline, which government officials said was received favorably by the companies, would require that Delek Group’s subsidiaries Delek Drilling and Avner Oil Exploration exit the Tamar reservoir entirely, selling their assets there within six years. Houston-based Noble Energy would only need to dilute its assets from its 36-percent share today to 25 percent, and could remain the basin’s operator.
Both companies would be required to sell their holdings in two much smaller offshore reservoirs, Karish and Tanin. Unlike previous drafts of the compromise outline, this version revokes a mandate that all Leviathan shareholders market their gas to the Israeli market separately.
Other issues, such as gas pricing and increasing export flexibility, are still under discussion, government sources said two weeks ago.
Gilo has continued to oppose the outline’s terms, voicing support for separate marketing from the Leviathan reservoir and denouncing Noble’s sale of any gas from the Tamar basin to the Israeli market.
To Gilo, the government’s advancement of the outline comes “potentially at the cost of harming independence, which is important from a public perspective, of the Antitrust Authority, or of damaging its ability to act unilaterally.”
He stressed that, from the beginning of the dispute, he has held the opinion that the matter should be solved among the companies and government officials rather than in the courts. If the matter had proceeded to court, Delek and Noble could have threatened to prevent the development of the gas reservoirs, he explained. As a result, Gilo said, he formulated the initial compromise outline on the matter, which was presented to the companies in February – an outline that included separate marketing from the Leviathan reservoir, among other differences.
“I believe that if all of the government offices had continued to be united behind that more competitive outline, there would have been a reasonable chance to implement it in the end, whether through an agreement or unilaterally,” Gilo said. “However, as mentioned, I have been told in recent days that the government and the ministries are aiming to do all in their power in order to advance the outline formulated in recent days.”
Acknowledging that such decisions may have “far-reaching consequences that are not related to competition, such as in foreign affairs and security and energy independence,” Gilo said these other concerns seem to be “at the heart” of the government’s considerations.
“Therefore, I do not think that it would be fitting or correct for the regulator in charge of competition to implement unilateral actions in the face of the overwhelming opposition of other government agencies, and without any support on their part,” he said. “I hope that the other government ministries will change their position regarding the outline. I will be here for three more months and I can help, including in examining the use of all of the powers available to me, if I have the support of the ministries.”
In response to Gilo’s decision, Prof. Eugene Kandel, head of the National Economic Council, stressed that he appreciates the work they have done together over the years, but noted that they have “a professional dispute regarding the optimal development of the gas industry.”
“The outline proposed by the government was formulated by a number of government agencies that toiled daily to promote competition in many branches of the Israeli economy,” Kandel said, adding that Gilo was the only government official to reject the latest version of the compromise. “The outline proposed by the government ensures competition in the gas sector, the extraction of gas from the earth, and energy security for the citizens of Israel, and promotes the arrival of Israeli gas market investors, as well as the political interests of the State of Israel.”
Government officials feared that by implementing Gilo’s preferred version of the outline, Israel could scare away investors and freeze the industry, according to Kandel.
“We need to learn from other countries that learned the hard way that policies that seem popular in the short-term become destructive in the long-term by stopping investment and preventing development of the industry,” Kandel continued. “What is offered today are responsible policies for the good of the State of Israel.”
Meanwhile, during Monday’s Likud faction meeting, Prime Minister Benjamin Netanyahu said the country’s mission regarding natural gas is to “remove it from the sea and bring the gas to the citizens of Israel.” Emphasizing that he, too, appreciates Gilo’s work, Netanyahu said all of the other parties supported the latest outline and “its power to realize the gift we have received from nature.”
Like Kandel, Netanyahu argued that the outline will increase competition and ensure the resource’s extraction, in addition to promoting political interests by supplying gas to the region.
“We need to ensure that the solution in Israel will not duplicate what happened in other countries,” the prime minister said, referring to situations in which gas was left in the ground for years. “This will not happen here. We are committed to a solution that will extract the gas from the deep sea and bring it to the citizens of Israel, and we will go ahead with advancing this solution.”
Finance Minister Moshe Kahlon, who ran his electoral campaign on the theme of breaking monopolies, remained mum on the subject Monday.
In December, Kahlon promised that he would recreate the magic he worked in making the cellular market competitive when he was communications minister to other sectors, citing banking, housing and, yes, gas.
“The root of the problem is concentration. It’s monopolies. It’s a country that has become a country of monopolies, cartels and oligopolies,” he said at the time.
On Monday, however, he seemed unfazed by the accusation that the decision he supported would not promote competition, and refused to offer an explanation as to why the compromise outline was a more suitable approach than the one Gilo championed.
The new energy, national infrastructure, energy and water minister, Yuval Steinitz, also did not comment on the situation.
Deri expressed regret that the antitrust commissioner was choosing to leave office, stressing that he had tried to persuade him not to quit.
“Professor David Gilo is a first-class professional and he performed his duties with integrity and loyalty,” Deri said. “I spoke to him and tried to convince him to continue in his position.”
In the Knesset plenum on Monday, MK Shelly Yacimovich (Zionist Union) called upon Deri to continue to try to persuade Gilo to stay, and Deri said he would.
“Gilo is the most senior regulator, the most professional among those who deal with natural gas, and his resignation is a serious blow to the public and a victory for the gas companies and their representatives in the government,” Yacimovich said.
The Movement for Quality Government, as well as a number of other Knesset members, likewise called for Gilo to withdraw his resignation.
“Do not abandon the Israeli economy at this difficult time,” the NGO said. “All of Israel’s citizens stand behind you, back your efforts and support your professional decisions. Return and undertake the struggle to dismantle the gas monopoly and the other ills of the economy, for the future of our country.”
MK Dov Henin (Hadash) said Gilo’s resignation should “concern each and every one of us,” and accused the government of “choosing to crush his recommendations and continuing to favor the interests of the gas monopoly tycoons over the public interest.”
MK Tamar Zandberg (Meretz) praised Gilo for his role as a “gatekeeper” and his ability to stand up for the public interest.
“I call upon members of the new government to seriously discuss Gilo’s opinion about dismantling the gas monopoly,” Zandberg said. “It would be a grim message to the public if the next antitrust commissioner would be appointed knowing that he must bend and give in to the gas monopoly as an opening position.”
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Antitrust Commissioner Resigns Over Natural Gas Dispute
May 25, 2015 | Times of Israel
By Tamar Pileggi
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.
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PM says Gilo was Alone in Opposing Gas Draft
May 25, 2015 | Times of Israel (Blog)
Prime Minister Benjamin Netanyahu says at a Likud faction meeting that Antitrust Authority chief David Gilo was the only person who opposed the revised government draft on the natural gas market.
“I appreciate his work very much, [but] in this case he was the only person who opposed the draft offered by professional experts. Apart from him all other participants support the draft, which can help realize the present we were given by nature, “Netanyahu says.
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Sample of Noteworthy Hebrew Tweets
May 25, 2015 | Twitter
- Moshe Debby (leading Israeli PR executive; 1,497 followers): “David Gilo at Energy Conference: I understand the damage done to the market, but I reached a different conclusion to everyone else”
- Yuna Leibzon (business correspondent for Galatz radio; 7,111 followers): “David Gilo has arrived (at Energy Conference). Says he’s received a wave of supportive responses to his resignation”
- Yuna Leibzon: “Before Gilo arrives (at Energy Conference), Assaf Eilat, Chief Economist and Deputy DG at antitrust authority is here. Opposed Gilo’s stance, interested in replacing him”
- Yuna Leibzon: “Gilo knew that staying would castrate the antitrust commission, that the gov’t would reverse his decision”
- Ilan Shiloah (media investor; 7,777 followers): “Gilo’s solution wasn’t applicable. Won’t be gas competition, solution needs to be price supervision”
- Ilan Shiloah: “Resignation of David Gilo is a slap in the face to anyone looking for competition in the market, even though I disagreed with Gilo’s solution. Kachlon has lost points”
- Guy Rolnik (Founder of The Marker; 25,700 followers): “Kachlon used the words monopoly, price of living, concentration around a thousand times during campaign. Since Gilo resigned, he’s dissappeared”
- Chico Menashe (diplomatic correspondent, IBA radio; 18,600 followers): “(sarcastically) So impressed and surprised by Kachlon’s clear and decisive stance on David Gilo and gas”
- Eytan Avriel (co-Founder & managing editor of The Marker; 4,015 followers): “Gilo’s resignation. Winners: Tshuva, Noble, Netanyahu, Finance Minstry, Journos who backed them all, tycoons, Gilo himself. Losers: the public and Kachlon, who disappointed”
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