A year and a half after Mubadala Petroleum in the United Arab Emirates sealed a deal to buy 22% of Israel’s offshore Tamar gas field, the Gulf state’s Abu Dhabi National Oil Co. is teaming up with BP to tap the energy resources of those same Eastern Mediterranean waters.

The agreement announced last week to acquire 50% of Israel’s NewMed Energy is valued at about $2 billion and will take the Israeli company formerly known as Delek Drilling private. It comes just as a free-trade pact between Israel and the UAE took effect April 1, strengthening commercial relations between the two countries that normalized their political ties with the 2020 Abraham Accords.

Israeli and Emirati leaders say they expect bilateral trade to reach $10 billion by 2026. Abu Dhabi’s ADQ holding company leads a consortium that offered in December to buy control of Israel’s biggest insurer, Phoenix Group.

Adnoc, the world’s 12th-largest oil company, is joining with BP, the fourth-largest, to buy 45% of the free-floating shares held by the public in NewMed along with about 5% of stake held by Delek Group, the holding company owned by Israeli billionaire Yitzhak Tshuva.

NewMed, which trades on the Tel Aviv Stock Exchange, holds a 45% stake in the Leviathan gas field located 80 miles off the coast of Haifa. That field contains an estimated 22 trillion cubic feet of gas, the largest find yet in the Eastern Mediterranean, and is operated by Chevron, the world’s seventh-largest oil company.

In its earlier incarnation as Delek Drilling, prior to its February 2022 rebranding as NewMed, the company was a key player in the exploration and development of the Tamar, Karish and Tanin natural gas fields. Under a natural gas framework agreement in 2015, the Israeli government required Delek to sell its holdings in those three fields to bust up its monopoly and that of its partners.

NewMed CEO Yossi Abu said in a social media post that the deal will likely “catapult NewMed Energy from the regional to the global stage.” The company plans to make a final decision on the deal in the second half of 2024, according to the Financial Times.

“The offer we received is the result of the warm relationships and bridges we have built in recent years with the energy companies working in the region, and is an important vote of confidence – the most significant given to the Israeli gas market in general, and to the business and assets of NewMed Energy in particular,” Abu told the FT. “Although Chevron is the operator, having a new player like BP and Adnoc will definitely enhance our ability to move this project forward.”

The deal refocuses a spotlight on the promise of investing in the Eastern Mediterranean’s offshore energy resources. 

Three years ago, it was Chevron that saw the promise of Leviathan, ultimately acquiring a 39.7% stake in the field when it bought Noble Energy. From a geopolitical perspective, that set the stage for Mubadala’s purchase of the Tamar field interest. 

“If the NewMed bid goes through, BP will bring its enormous exploration experience to the Eastern Mediterranean, which is thought to have more reserves waiting to be discovered,” Simon Henderson, the director of the Bernstein Program on Gulf and Energy Policy at The Washington Institute for Near East Policy, wrote in a March 29 report.

“While the BP/Adnoc bid for NewMed suggests confidence in the area’s energy future, policymakers and other observers should keep in mind that energy projects — especially expensive, deep-sea ones — have a typical investment horizon of twenty years ahead,” Henderson wrote.

NewMed had been in merger talks with U.K. group Capricorn Energy, a Scottish company previously known as Cairn Energy, but activist investors sank the deal.