BP has halted negotiations on a $2bn deal (£1.56bn), which would have invested in an Israeli gasfield, as warfare with Hamas rages in Gaza.
The British oil giant was expected, along with Abu Dhabi National Oil Company, to purchase a 50% stake in Tel Aviv listed NewMed Energy. This company is the owner of Leviathan offshore.
NewMed said that the talks were suspended on Wednesday due to “uncertainty caused by external factors”.
The reference did not give any further details, but it was made in the context of the ongoing conflict in Gaza which is now entering its sixth month.
Israel invaded Gaza in response to a terrorist attack by Hamas on the country.
Hamas fighters massacred 1,200 civilians before retreating into Gaza with 250 hostages. This triggered a massive Israeli response and a war in which thousands of civilians died .
NewMed stated on Wednesday that it is still interested in progressing the deal with BP Abu Dhabi, but the talks will remain suspended unless the “discussions are resumed or the process terminated”.
The company said: “There is no guarantee that the discussions will continue or that an accord will be reached at a future date, nor can there be any certainty as to the terms of a contract should one be reached.”
The Gaza conflict is believed to have been the first major deal to fall apart.
BP branded its joint investment with Abu Dhabi a major step in a business that it hoped will focus on “gas development in international areas, including the East Mediterranean, of mutual interest”.
The company has declined to comment about the NewMed announcement made on Wednesday.
The deal would have also signaled a strengthening of relations between Israel and the United Arab Emirates.
BP’s plans to reduce oil production are part of its commitment to reduce carbon footprint. However, executives have also highlighted the use of gas as a fuel for transition.
NewMed, the largest shareholder in Leviathan, the massive offshore field operated by Chevron that exports gas to Egypt, Jordan, and Jordan, is a major stakeholder.
Reuters quoted a source as saying: “The geopolitical and regional issues have made the situation difficult.”
Once things settle down, we plan to complete the process successfully.
BP and Abu Dhabi National Oil Company strengthened their ties earlier this year when they formed a joint venture focusing on two Egyptian natural gas fields.
Adnoc is ranked 12th in the world for oil production.
William Lin, BP’s CEO, said that the partnership between BP and Adnoc has lasted for over 50 years.
“We will continue to produce and supply secure, lower-carbon natural gas in Egypt.”