BP and ADNOC Offer $2B to Jointly Acquire 50% Stake in Israeli Offshore Gas Producer

Ron Bousso
Tuesday, March 28, 2023

BP and Abu Dhabi's state oil giant ADNOC on Tuesday made an offer to acquire 50% of Israeli offshore natural gas producer NewMed Energy for around $2 billion.

The offer would involve acquiring NewMed's free floating shares and taking the company private and would mark Abu Dhabi National Oil Co (ADNOC) and BP's entry into Israel's growing energy sector.

ADNOC and BP said they intend to form a new joint venture as part of the deal that will be "focused on gas development in international areas of mutual interest including the East Mediterranean."

NewMed is the largest stakeholder in the giant Leviathan offshore field, operated by Chevron, which produces 12 billion cubic meters (bcm) of gas that are supplied to Israel, Egypt, and Jordan. 

The field's partners are planning to further expand its production and are also exploring plans for a liquefied natural gas (LNG) terminal to further boost exports.

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

Last year, Abu Dhabi's Mubadala Petroleum acquired 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.

BP shares gained 2% at the open in London on Tuesday.

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

($1 = 3.5669 shekels)

 (Reuters - Reporting by Ashitha Shivaprasad in Bengaluru; editing by Louise Heavens, Jason Neely and Sharon Singleton)

Categories: Energy Mergers & Acquisitions Middle East Industry News Activity Mediterranean Sea

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