BP, UAE suspend USD 2 bn gas deal in Israel amid Gaza war

BP and a United Arab Emirates (UAE) oil company have halted discussions regarding the purchase of a 50 per cent stake in Israel ‘s primary natural gas producer, citing the ongoing Gaza war and associated risks as deterrents to the proposed USD 2 billion deal.

NewMed Energy announced on Wednesday that all parties involved had collectively agreed to “suspend discussions” on the deal “due to the uncertainty created by the external environment.”

BP (BP) and Abu Dhabi’s state oil company Adnoc had “reiterated… interest in the proposed transaction,” it added in a statement, without mentioning the conditions under which talks might resume, as reported by CNN.

“There can be no certainty that discussions will resume or that an agreement will be reached in the future, nor as to the terms of an agreement should one be reached,” NewMed Energy said.

BP declined further comment beyond confirming the contents of NewMed’s statement, while Adnoc also chose not to provide any additional remarks. Following the announcement, NewMed Energy’s shares experienced a decline of up to 7 per cent on the Tel Aviv stock exchange.

The decision underscores the significant impact of the ongoing Gaza war on business operations in the Middle East.

Notably, several Western brands, including Starbucks, McDonald’s, KFC, and Pizza Hut, have encountered boycotts in the region, with consumers perceiving them as having ties to or supporting Israel’s actions in Gaza, according to CNN.

BP initially unveiled its proposed investment in NewMed Energy almost a year ago as part of a broader strategy to establish a joint venture with Adnoc for natural gas extraction in mutually beneficial regions, particularly in the eastern Mediterranean. The potential deal was widely regarded as a testament to the deepening financial ties between Israel and the UAE following their diplomatic normalization in 2020. However, the escalation of the Gaza war has strained these ties, with the UAE consistently advocating for an “immediate ceasefire.”

Under the terms of the proposed agreement, BP and Adnoc were slated to acquire a 50% stake in NewMed Energy by purchasing the company’s publicly traded shares and a portion of the stake held by Delek, an Israeli energy conglomerate.

NewMed Energy currently holds a 45.34 per cent interest in the Leviathan Reservoir, one of the largest gas reserves in the Mediterranean and home to one of the world’s most significant deepwater gas discoveries. Chevron holds the remaining 39.66 per cent stake in the reservoir.

Separately, BP was among six companies awarded licenses by Israel’s energy ministry in October to explore for natural gas in the Mediterranean.

Despite the suspension of the deal with NewMed Energy, BP and Adnoc remain engaged in other collaborative ventures. In a recent announcement, the two entities revealed plans for a joint venture aimed at developing natural gas assets in Egypt, CNN reported. (ANI)