Leviathan Development to Proceed Without Mandated Local Labor Pool Sourcing
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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/
