Thursday, April 11, 2013 1:31 pm
Gas company says Israel taxes may deter investors
By TIA GOLDENBERGAssociated Press
Charles Davidson, CEO of Texas-based Noble Energy, criticized Israel's decision in 2011 to nearly double tax rates on gas profits after his company had already invested $1 billion in an offshore field. He said the "very unusual" move may have driven away companies from investing in Israel's emerging gas sector.
He said he sensed hesitation from potential investors who could help develop the Leviathan field, a large find that is expected to produce enough gas for export.
"I felt that ... companies were a little bit reluctant because of what had happened on taxes in the past," Davidson said at the company's local offices in the coastal town of Herzliya.
In 2011, Israel's government raised taxes on gas and oil finds, boosting the revenues to between 52 and 62 percent from under 30 percent.
Davidson is in Israel after gas from Tamar, one of Israel's new, sizable fields, started being extracted last month. He hopes to convince authorities to agree on an export policy that would provide clarity for investors looking to develop the resource. For now, the gas is being used for domestic use only and sold at fixed, previously negotiated prices.
On Wednesday, Davidson met Israeli Prime Minister Benjamin Netanyahu and said he "encouraged" him to move on export. He said Netanyahu was receptive but gave no time frame.
The Tamar field was discovered in 2009 and holds an estimated 8.5 trillion cubic feet of gas. Leviathan, found in 2010, boasts an estimated 16 to 18 trillion cubic feet and is expected to go online in 2016. Around that time, Israel is expected to begin exporting.
Israel has yet to adopt an export policy for its natural gas reserves. A 2012 inter-ministerial report concluded that Israel should preserve enough natural gas for itself for 25 years, leaving about half of its estimated reserves for potential export. The discoveries are minimal compared to gas giants Russia, Qatar or Iran but the country's proximity to Middle Eastern and European markets could make it an important regional player.
The consortium drilling off Israel's coast has been pushing for Israel to adopt the recommendations. They say until there is a decision, they are not able to move forward on financing the field's development, building infrastructure to transport the gas or securing global markets.
There have been calls from some in Israel to minimize gas available for exports in order to ensure domestic supply.