Battle Over Natural Gas Royalties Heats Up in Israel


"The gas belongs to the public" - one of Civil Action Forum's publicity cartoons.

When massive natural gas reserves were discovered off the coast of Israel in early 2009, it seemed as if the country's energy problems were solved. Many expected that a resource bonanza was on the way, one that would bring countless benefits to the country's citizens and raise living standards.

At the time, I was reporting from Abu Dhabi, where I observed first-hand the benefits of living in an oil state. Practically the entire population was wealthy, and the country was attepting to develop itself into a renewable energy superpower (after having dumped, of course, endless quantities of carbon into the atmosphere). I wondered if Israel would follow a similar path.

Since then, Israel has discovered more and bigger gas deposits, reportedly worth hundreds of billions of dollars and capable of supplying the country's energy needs for decades (instead of far dirtier fuel oil and coal). At the same time, however, it has become clear that, due to anachronistic laws, most of the benefits will be headed straight into the pockets of a handful of businessmen, with very little left over for the country's social development. Recently, though, a grassroots movement has emerged to prevent this from happening. Its rallying cry: the gas belongs to the public. The campaign is being led by Rabbi Michael Melchior, a former left-wing parliamentarian. Rabbi Melchior recently founded Civil Action Forum (Hebrew link), which is calling on the government to use the proceeds from Israel's natural gas deposits to achieve social goals, such as narrowing socio-economic gaps and building affordable housing.

The group's central demand is that the government increase its share of revenues from natural gas deposits located off Israel's coast. Under current Israeli law, the government is only entitled to around 24% of fossil fuels revenues - one of the lowest rates in the world. Those laws date back to the early 1950's, and were meant to encourage gas and oil exploration at a time when no one seriously believed that either would be found in commercial quantities.

Under Rabbi Melchior's plan, the state would receive 80% of the revenues, with energy companies retaining 20%. The proposal is based on the "Norwegian model," which Melchior witnessed up close in the 1980's as Norway's Chief Rabbi.

The Norwegian government takes in approximately 85% of the revenues from its massive oil and gas deposits. This has allowed it to create an exemplary welfare state, with universal health care and subsidized higher education. In 2009, it ranked first in the UN's Human Development Index. Despite its obvious environmental liabilities, Norway's fossil fuel-based economy has not prevented it from taking a leading role in the fight against climate change. Last year, Norway announced its goal of becoming carbon-neutral by 2030.

Predictably, the private companies involved are fighting tooth and nail against any change in the status quo that would affect their bottom lines. One company, Noble Energy, has already made it clear that it expects to pay the current rate, whether the government raises its share of revenues or not. However, despite pressure from the gas companies, the government has indicated that it supports raising rates, although it is not clear yet how high.

Meanwhile, Civil Action Forum's campaign is gaining momentum, with a position paper in circulation, almost 4,000 signatures on an online petition 1,700 people signed up to its Facebook group. An ongoing publicity campaign has also resonated with Israelis, who are beginning to grasp the potential of the gas windfall to solve social and environmental problems - even if it doesn't transform Israel into an uber-rich petroleum state.

Tags: Energy | Israel

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