Adnoc and BP sign a $2 billion gas deal, hot on the heels for energy transition pivot

The UK’s supermajor BP has agreed to acquire a half-share in Israeli explorer NewMed Energy from Abu Dhabi National Oil Company (Adnoc). This will amount to approximately $2 billion

NewMed Energy, a subsidiary to Delek Group is the largest shareholder of the Leviathan offshore Israel gas project.

The deal will see the BP-Adnoc consortium acquire NewMed’s 45% stake, which is now publicly traded, and 5% of the issued capital from Delek Group. This will further strengthen their green energy partnership, which was announced last year.

This acquisition would be Adnoc’s largest commercial deal in the region. It follows the 2021 peace agreement between Israel and the United Arab Emirates, known as the Abraham Accords.

NewMed reported that the consortium offered 2.05 Israeli shekels ($3.36) per ounce, which is 72% more than the market price. Reuters estimated that the company’s value was nearly $4 billion.

Tuesday’s announcement by BP confirmed that Adnoc and it had made a non-binding offer to acquire NewMed Energy’s free float stake and partial acquisition delek’s share. This will give the consortium a half stake in the company headed by Yossi Abu, chief executive.

Adnoc and BP intend to create a joint venture focused on the development of gas in international areas mutually beneficial, including the East Mediterranean,” BP said. The proposed transaction was “a significant step towards establishing this dynamic joint enterprise”.

Noble Energy discovered the Leviathan field in late 2010, which holds 22.9 trillion cubic feet worth of natural gas.

Chevron acquired Noble Energy in 2020 and operates Leviathan with a 39.7% interest. NewMed has a 45.3% share and Tel Aviv-based Ratio holds a 15% working interest.

Last year, Adnoc and BP signed deals to create hydrogen and technology hubs in the UK. This is a significant cleaner-energy push and a sign of a better relationship between the two parties.

Adnoc, a UK-based investor, has joined the H2Teesside Blue Hydrogen Project design phase. It took a 25% stake and marked its first investment in the UK.

H2Teesside plans to build two 500-megawatt hydrogen production plants by 2030. The project is expected to start operations in 2027.

Relations between the three countries were normalized by the Abraham Accords which included Bahrain.

Multiple agreements were also signed by Israel and UAE on visa exemptions, aviation and economic cooperation, and protection of investment in 2021.

Both countries have reached a bilateral agreement which provides protection and incentives for investors from both countries.

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