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BP teams up with Abu Dhabi oil group to bid for Israel’s NewMed

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BP has teamed up with ADNOC to bid for an Israeli gas group as part of plans to jointly develop a gas project in the Eastern Mediterranean.

Tel Aviv-listed NewMed has a market capitalization of 8.6 billion shillings ($2.4 billion) and is majority-owned by Israel’s Delek Group. bp said it had partnered with Adnoc to make a non-binding offer to take the company private by acquiring free float shares and a partial stake in Delek. If the bid is successful, BP and Adnoc will own more than 50% of NewMed.

“BP and Adnoc intend to form a new joint venture focused on gas development in international areas of mutual interest, including the Eastern Mediterranean,” the British energy major said in a statement on Tuesday. “This proposed transaction with NewMed Energy will be an important first step in establishing this dynamic joint venture with Adnoc.”

NewMed holds the largest stake in the giant Leviathan offshore oil field, which is operated by Chevron about 130 kilometers off the coast of Israel. Discovered in 2010, it produces 12 billion cubic meters of gas per year and supplies Israel, Egypt and Jordan.

Shares of NewMed soared 25% Tuesday morning. BP shares rose 2%.

Adnoc said the deal, if completed, would “strengthen the broader strategic partnership between Adnoc and BP”. It would also represent a further strengthening of commercial ties between the United Arab Emirates and Israel after the two countries agreed to normalize relations in a US-brokered 2020 deal. Israel and the United Arab Emirates signed a trade agreement last week to reduce or eliminate tariffs on most goods traded between the two countries.

BP took action in February to slow its fall from oil and gas Calls for companies to invest in “today’s energy system” have grown louder, echoing what chief executive Bernard Looney said.

NewMed has been in merger talks with British group Capricorn Energy (formerly Cairn Energy), but the activist investor deal breaker.

The proposed deal with BP and Adnoc comes amid growing cooperation between Israel and some of its Middle Eastern neighbours.

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