Leviathan Development to Proceed Without Mandated Local Labor Pool Sourcing
The Leviathan offshore natural gas project will not be required by the Israeli government to use Israeli Labor. Israel’s Energy and Water Resource Ministry made this decision two weeks ago. The decision resulted from negotiations that the ministry held with Leviathan’s operators over the conditions of the franchise which they were given by the Israeli government to extract natural gas from the Mediterranean.
Israel’s Energy and Water Resource Ministry has now offered a new agreement to for Leviathan. This new agreement was reached without any prior public hearings or debate and without the consultation of other government ministries.
It is a very common practice around the world that when a project, such as Leviathan, receives a government contract its’ operators agree s to acquire equipment and labor from companies in the nation that granted it the franchise.
Leviathan’s partners, however, signed an agreement with Israel’s Ministries of the Economy and of Energy, which included an ambiguous clause relating to its use of Israeli Labor. The clause does not give specific numbers of Israelis to be employed, nor does it set a minimum percentage of Leviathan’s total labor and equipment that must come from Israel.
This agreement was reached in spite of the fact that other Israeli government ministries have been investigating whether to enact new legislation that would set a minimum requirement for all expenditures on goods and services by foreign concerns operating a franchise in Israel to be spent on Israeli goods and labor. The figures discussed were anywhere from 25% to 35% of the value of a foreign contract. But no such requirement has been imposed on any of the foreign companies that have received franchises from the Israeli government for natural gas exploration.
Leviathan’s partners and other energy companies say that they have simply paid a fee for the right to explore on Israeli territory and are not the recipients of government tenders. As such, in their view they should not be held accountable to any local regulations regarding the use of local goods and labor, that apply to foreign companies which have received an official government tender.
Leviathan was given six months to submit a written plan to the Israeli government outlining how it will hire Israeli workers. The agreement left out previous clauses, which set quotas for how much Israeli equipment it would procure and to what extent it would rely on Israeli firms for research and development. The new agreement contradicts promises made in the past by Israeli government officials that Leviathan and other projects given tenders for natural gas exploration would be obligated to use Israeli firms and Israeli technologies for their drilling operations.
Leviathan is expected to eventually raise $10 billion in investments. If the original government promises were to be kept then there could have been a reinvestment in Israeli companies worth several hundred million U.S. dollars.
In a statement to the Israeli Hebrew daily newspaper Haaretz, Israel’s Energy and Water Resources Ministry said, “with an understanding of the importance of the matter to the Israeli economy, the ministry has incorporated a clear-cut requirement to employ Israeli workers in the conditions of the franchise. In light of the importance of the matter, we aspire to dedicate part of the gas royalties to investment in energy ministries.”
As Israel is a new player in the offshore oil and gas game, in any case it would be difficult in many cases to quickly find the local skills necessary to meet Leviathan’s specialized needs. What is critical is that, over time, as a policy Israelis should become trained for the kinds of jobs that are planned, and be in a position to fulfill them for future such projects.
Link to source: http://jewishbusinessnews.com/2014/04/13/leviathan-development-to-proceed-without-mandated-local-labor-pool-sourcing/
