BP and ADNOC Suspend Talks on Israeli Gas Stake Due to Regional Uncertainty

BP and the Abu Dhabi National Oil Company (ADNOC) have suspended negotiations to acquire a 50 percent stake in Israeli natural gas producer NewMed, the Israeli company announced Wednesday. Regional uncertainty was cited as the reason for the suspension.

In March 2023, BP and the state-owned oil company of the United Arab Emirates (UAE), a major Middle East oil and gas producer, proposed a deal worth approximately $2 billion to buy a significant share in NewMed.

The US-based energy multinational Chevron operates Israel’s Leviathan natural gas field, in which NewMed has the largest stake. With 22.9 TCF of recoverable gas, Leviathan is the Mediterranean’s largest natural gas field and a major regional producer.

The company also owns a 30 percent stake in Cyprus’ Aphrodite natural gas field, with Chevron and Shell each holding 35 percent.

BP and ADNOC were interested in gaining exposure to the Eastern Mediterranean’s significant natural gas reserves through this proposed deal. However, an attack on Israel by Hamas in early October and the subsequent conflict derailed the negotiations.

According to an Israeli company filing today with the Tel Aviv Stock Exchange, NewMed, which was reviewing the bid, and the two energy giants decided to “suspend discussions in connection with the proposed transaction due to the uncertainty created by the external environment.”

Both BP and ADNOC have restated their interest in the potential deal, NewMed added.

“The process will remain suspended until discussions resume or it is concluded. There is no certainty that discussions will resume or that an agreement will be reached in the future, nor on the terms of any agreement,” the company noted.

After the Hamas attack on October 7th, Israeli authorities temporarily halted production at the Leviathan field before resuming it roughly a week later, redirecting the natural gas through inland Israel. Much of the production is designated for domestic use and liquefaction in Egypt.