Controversy Erupts over Assignment of Oil Prospecting Rights in Sinai to an American Firm in Which P

An angry controversy has erupted over the government’s assignment of oil prospecting rights in an area of southern Sinai to an American company in which a very prominent, but unidentified. American Jew with a long record of activity in behalf of Israel is a key figure. The contract was signed on the eve of Independence Day and does not require approval by the Knesset because the government has the authority to make such deals. The Knesset finance committee intends to hold hearings on the issue nevertheless and many MKs and persons associated with Israel’s oil industry are questioning the propriety of awarding a potentially lucrative contract to a foreign company when Israel possesses the manpower and resources to undertake the prospecting alone.

Dr. Michael Kisch, head of the government owned Sinai oil prospecting company who had forcefully opposed the deal has been sent on a six-month involuntary leave of absence. In effect suspended temporarily from his job.

TIGHT SECRECY IMPOSED

Tight secrecy has surrounded the project. The government has refused to identify the American company, the prominent American Jew or the exact area of Sinai where the drilling will take place. But government sources defend the contract on grounds that it was essential to bring in an experienced foreign company to handle the drilling and supply the necessary equipment and trained manpower. The sources also noted that the area where the oil search will be carried out may eventually have to be evacuated by Israel, in which case the presence of a foreign concessionaire would protect Israel’s interests.

REASONS FOR OPPOSITION

It was learned here that under the contract the American company will bear 50 percent of the drilling costs and will receive 25 percent of the net income from any oil that is found. The Israeli government will get 75 percent.

According to Dr. Kisch and others opposed to the agreement, the area of Sinai has already been surveyed by geologists and is very promising. They say that oil can be expected to be found very quickly and the American company, which assumes little risk, will be able to cover its investment in a short time and reap large profits.

They allege that the prominent American Jew, and another Jewish personality, not as well known as the first, were in fact being rewarded for their past activities on behalf of Israel and will enrich themselves handsomely. According to circles close to Dr. Kisch, income from the new oil field will amount to some $46 million by March 1978.

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