Raising royalties on natural gas and harming US companies such as Noble Energy Inc. (NYSE: NBL) is liable to result in a harsh response from the US government and Congress, damaging the delicate fabric of US-Israeli relations, says former Israeli Ambassador to the UN Dan Gillerman in a position paper submitted yesterday to the Sheshinski committee on fiscal policy on oil and gas resources.
Gillerman said that Noble Energy chose to invest in Israel, making an unprecedented private investment of more than $500 million, despite the problematic international and business environment. The fact that it succeeded, after decades of failure in which no gas discoveries were made in Israel, should entitle it to a medal, not a punishment.
Gillerman said that on October 20, Noble Energy and its CEO, Charles Davidson, were scheduled to receive an award for its investment in Israel from the America-Israel Friendship League at a special gala evening. Two days before this event, celebrations will be held in Washington to mark the 25th anniversary of the US-Israel Free Trade Agreement.
"It would be very odd, if not macabre, if to mark this historic agreement, and the honor that Noble Energy will be given, with discordant notes from Israel in the form of the committee discussions, and possibly even recommendations to raise the royalties (including, heaven forbid, retroactively)," wrote Gillerman.
He added, "This act would be perceived as fining and penalizing Noble Energy, a true friend of Israel, for its activity and investment in the State of Israel. Such a step is liable to have severe repercussions and devastating results on Israel's image and on how the Israeli economy is perceived in the world in general, and in the US in particular."
Gillerman said that the very act of establishing the Sheshinski committee was liable to drive away foreign investors from the country. "The act of establishing the Sheshinski committee… has already caused severe damage to Israel's image," he wrote.
Gillerman currently serves as chairman of Markstone Capital Partners Group LLC. Before serving as Israel Ambassador to the UN, he was chairman of the Federation of Israeli Chambers of Commerce. He submitted his three-page letter to the Sheshinski committee privately and at his own initiative.
Published by Globes [online], Israel business news - www.globes-online.com - on August 26, 2010
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