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British multinational oil and gas company BP plc and Abu Dhabi National Oil Company (Adnoc) announced a joint bid on Tuesday for a 50 percent stake in Israel’s NewMed Energy in a deal worth around $2 billion.
As part of the non-binding offer, the two energy companies will purchase 45% of the publicly held free float shares of NewMed Energy, formerly known as Delek Drilling (part of Yitzhak Tshuva’s Delek Group), and approximately 5% of Delek Group’s shares will Privatization of Israeli offshore gas producer. Shares of NewMed rose nearly 30% in afternoon trading in Tel Aviv.
The deal would give BP and United Arab Emirates state oil company Adnoc a foothold in Israel’s offshore gas fields and its growing energy export market for projects in the Eastern Mediterranean.
BP and Adnoc said they planned to form a joint venture for the deal that would “focus on gas development in international areas of mutual interest, including the Eastern Mediterranean.”
The proposal is another sign of warming relations between the UAE and Israel after the two countries signed a normalization agreement in 2020 as part of the US-backed Abraham Accords. Back in 2021, Delek Drilling sold its 22 percent stake in Israel’s Tamar offshore gas field in the eastern Mediterranean to Abu Dhabi’s government-owned Mubadala Petroleum for about $1 billion.
NewMed is a major owner with a 45% stake in Israel’s Leviathan gas field on the Mediterranean coast, which contains an estimated 22 trillion cubic feet of natural gas, and is involved in the development of the Tamar, Karish and Tanin gas fields.
Yossi Abu, CEO of NewMed Energy. (Inbal Marmari/courtesy)
Israel’s gas discoveries and operations in recent years have put the country on a path to energy independence and transformed it into a gas exporter, while largely shielding it from the worst energy crisis sparked by Russia’s war on Ukraine this year impacts, areas with scarce natural resources.
Currently, the maximum annual volume delivered from the Leviathan reservoir is 12 billion cubic meters for the supply and sale of gas to Israel, Egypt and Jordan.In recent weeks, partners in the Leviathan gas field operated by US energy giant Chevron have announced exploration plan For a floating liquefied natural gas (LNG) terminal off the coast of Israel and a third subsea pipeline to increase gas production and export to Europe and Asia.
NewMed chief executive Yossi Abu hailed the BP-Adnoc deal as a springboard to “take NewMed Energy from the regional to the global stage”.
“The offer we have received is the result of the goodwill and bridges we have built in recent years with energy companies working in the region, and is an important vote of confidence – the most important vote ever for the Israeli gas market, and NewMed in particular Energy’s business and assets,” Abramovich said.
Under the terms of the offer, the BP-Adnoc joint venture will pay NIS 12.05 per share purchased, a premium of about 72% to NewMed’s closing price in Tel Aviv on March 26, valuing the company at NIS 14.1 billion grams ($4 billion). If the transaction is approved, NewMed will become a private company equally owned by the BP-ADNOC joint venture and the Delek Group.
Israel Katz, Israel’s energy and infrastructure minister, welcomed the proposed deal, saying it “demonstrates the potential and attractiveness of the Israeli gas industry to the world” and “the strength of the relationship and trust between Israel and the UAE”.
From left: Yossi Abu, CEO of Delek Drilling, with Dr. Bakheet Al Katheeri, Executive Director of UAE Industries, Mubadala Investment Company, and Mansoor Mohamed Al Hamed, CEO of Mubadala Petroleum (both on screen), September 2021 . (Refi Daloya)
Katz added that once details of the deal are submitted to his office, approval of the deal will be subject to scrutiny by the ministry and professional bodies.
Together with several partners, Delek Drilling led the discovery and development of Israel’s Leviathan, Tamar, Karish and Tanin gas fields on the Mediterranean coast.in a Controversial Gas Framework Agreement In 2015, the Israeli government asked Delek to sell its shares in Tamar, Karish and Tanin in order to break the monopoly of itself and its partners.
The company sold all of its shares in Karish and Tanin to London-based Greek company Energean in 2016. After the sale, Delek Drilling, which changed its name to NewMed Energy in February last year, is looking to tap new export markets and has been thinking about moving into alternative energy (such as hydrogen and carbon capture) and renewable energy.
Commenting on the latest offer, BP said, “When completed, this will strengthen Adnoc and BP’s broader strategic partnership in oil and gas, hydrogen and carbon capture and storage technologies and will deepen the partners’ long-standing relationship.”
At the end of last year, NewMed inked An agreement was reached with Morocco and Adarco Energy for offshore gas exploration and production licenses in the North African kingdom after Morocco normalized relations with Israel in 2020 as part of the Abraham Accords.
August, NewMed cooperating Partnered with Israel’s Enlight Energy to promote renewable energy projects in the Middle East and North Africa, including countries with which Israel does not have formal diplomatic relations.
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