ADNOC,BP offer to buy 50% of Israel’s offshore natural gas producer

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BP and ADNOC have proposed to purchase 50% of NewMed Energy, an Israeli offshore natural gas producer, for approximately $2 billion. By making this offer, the companies are entering into Israel’s expanding energy industry. The proposition would entail obtaining NewMed’s publicly traded shares and privatizing the company. Following the announcement, BP’s stocks rose by 2%, whereas NewMed’s stocks increased by approximately 30%.

As part of the agreement, ADNOC and BP have announced their intention to create a new partnership aimed at developing gas resources in mutually beneficial international regions, such as the East Mediterranean. NewMed, which owns the majority stake in the Leviathan offshore gas field operated by Chevron, produces 12 billion cubic meters of natural gas, which are sold to Israel, Jordan, and Egypt.

NewMed and its partners plan to nearly double Leviathan’s production to 21 to 24 bcm by 2027 are also exploring plans for a liquefied natural gas (LNG) terminal to further boost exports, Chief Executive Officer Yossi Abu told Reuters.

This is a sign of confidence in the East Med becoming a major supplier of gas to Europe,” Abu said.

The offer is a further sign of the strengthening economic links between Israel and the United Arab Emirates since the two countries agreed to normalize ties in 2020.

Last year, Abu Dhabi’s Mubadala Petroleum acquire from Delek Drilling a 22% stake in the east Mediterranean Tamar gas field for about $1 billion.

For BP, the deal highlights the British company’s focus on growing natural gas production after Chief Executive Bernard Looney last month slowed down its shift away from fossil fuels.

The offer price is 12.05 ILS ($3.38) per share, reflecting a 72% premium above the pre-deal market price, valuing the entire company at about 14.1 billion ILS, or $3.96 billion.

After the deal closes NewMed will become a private corporation equally held by the BP-ADNOC JV and Delek Group, which holds the remaining 50%.

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