Israel’s Supreme Court rejected on Wednesday, January 25, petitions submitted by two oil and gas exploration firms against the so-called “Sheshinski Law,” upholding the state’s right to increase its share of their revenues. Isramco, a partner in the Tamar and Shimshon natural-gas licenses, and Givot Olam, owner and operator of the Meged oil-field license, filed the petitions, arguing that the law would retroactively harm them. They said they had obtained their property rights and made large investments before the government decided to establish the Sheshinski Committee.

Demonstrators in Tel-Aviv demand raising state’s tax compensation and royalties from natural resources (Photo: Megama Yeruka)

Under the 2011 Oil and Tax Revenues Law, which was based on the Sheshinski Report’s recommendations, the state’s share of net profits from oil and gas production will increase from its current level of 20% and rise incrementally to 50%, depending on the amount of excess profits, while the rate of royalties paid to the state will remain 12.5%.

MK Dov Khenin (Hadash – Joint List) said he would propose legislation that raises government royalties from natural resources once the new Knesset session begins. Khenin praised the Supreme Court’s decision to reject the petition against Sheshinski’s policies, saying the state has a right to derive funds from profits made from its natural resources. “The Court confirmed all our arguments that there is no retroactivity in raising royalties,” Khenin said. “Now we need to raise the Dead Sea royalties (less than 10%), phosphates (even less) and mineral water (where there are no royalties at all). In the opening session of the Knesset, I will promote comprehensive legislation on the subject,” added the communist MK.