Plan drafted by Finance Ministry committee roughly doubles current tax rates to collect 52% to 62% of revenues from gas, oil finds

Associated Press
Published: 01.24.11, 07:52 / Israel Business

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The cabinet approved a sharp increase in taxes on profits from its recently discovered gas reserves Sunday, despite opposition from Texas-based Noble Energy Inc., the main driller, and its Israeli partners.

The plan drafted by a Finance Ministry committee would roughly double current tax rates to collect 52% to 62% of revenues from gas and oil finds.

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Noble and its Israeli partners say the new taxes are too high and accuse Israel of changing the rules in the middle of the game.

Prime Minister Benjamin Netanyahu’s Cabinet adopted the committee’s recommendations in full on Sunday.

“The resource is important to Israel’s economy and to Israel’s future,” Netanyahu said at a cabinet meeting. “We will cooperate with the investors in order to bring the gas to Israel quickly, and so the most important thing now is to move forward,” Netanyahu said.

The Knesset must still approve the arrangement.

Finance Ministry spokesman Udi Adar said the committee’s conclusions apply to current gas finds as well as future discoveries.

Two of the newly discovered fields are expected to begin producing next year.

Noble and its Israeli partner, Delek Group, recently announced an estimated 16 trillion cubic feet of natural gas found in the Leviathan field, off Israel’s Mediterranean coast.

Local reports valued the discovery at anywhere from $45 billion to $90 billion, depending on factors like drilling costs and energy prices.

Along with the Tamar field and its 8.5 trillion cubic feet of natural gas now in development, the Leviathan find could turn Israel into a major gas producer.,7340,L-4017810,00.html