BP and SOCAR join NewMed in grabbing slice of multi-license gas exploration pie off Israel

Israel’s Ministry of Energy and Infrastructure has put its stamp of approval on six licenses in a fourth competitive process for natural gas exploration in the State of Israel’s Exclusive Economic Zone (EEZ). The list of license winners entails Azerbaijan’s SOCAR, NewMed Energy – former Delek Drilling – and Britain’s BP.

The fourth offshore bidding round for natural gas exploration in the EEZ of the State of Israel was published by the Ministry of Energy on December 13, 2022. A notice from the Petroleum Commissioner at the Ministry of Energy was received on October 29, 2023, stating that a decision was made to grant six exploration licenses (blocks) in one cluster—licenses 4, 5, 6, 7, 8, and 11 in Cluster I—to a joint venture consisting of SOCAR, BP, and NewMed.

However, it was necessary to undertake several actions to complete the license-granting process, including registration of SOCAR and BP at the Registrar of Companies and the Tax Authority, payment of the signature bonus, and transfer of guaranties for the licenses to the Ministry of Energy.

The consortium composed of SOCAR, BP, and NewMed Energy has now received licenses to undertake natural gas exploration in the Israeli EEZ. This is described as the first involvement in natural gas exploration outside of Azerbaijan for SOCAR. The remaining bid round results are expected to be published in the future.

Eli Cohen, Israel’s Minister of Energy and Infrastructure, commented: “SOCAR and BP’s entry is excellent news for the State of Israel. Natural gas is a strategic asset, strengthening our economic and political standing in the world in general and in the Middle East in particular. Thus, especially in these times, we are working to expand the production of natural gas for the benefit of both domestic and export markets.”

Cohen and Chen Bar Yoseph, Director of the Natural Resources Administration, granted six licenses per the minister’s policy to explore for additional natural gas reserves to ensure domestic supply and increase exports. More licenses are expected to be granted in the future, with a fifth bid round anticipated to be launched this year. 

These six licenses were granted in the area known as Zone I to the winning consortium, with each company holding approximately one-third of the rights to each license. SOCAR will serve as the operator of all licenses. This will be BP and SOCAR’s first foray into natural gas activities in Israel.

Furthermore, Mikayil Jabbarov, Azerbaijani Minister of the Economy and Chairman of the SOCAR Supervisory Board, and Rovshan Najaf, SOCAR’s CEO, were in attendance during the awarding ceremony. Zone I, approximately 1,700 square kilometers in area, is located in the northern part of Israel’s economic waters.

The activity in this area, which Israel’s Ministry of Energy and Infrastructure claims to have seldom been explored from a natural resource perspective, is expected to focus in the first stage on conducting seismic and other surveys, while the results of these surveys will inform the decision on whether to drill any exploration wells. 

Bar-Yoseph pointed out: “We are happy to grant today the first licenses following the fourth competitive process, which constitutes a breakthrough in the field of natural gas exploration in Israel. These licenses, along with others to be granted later on, express an investment commitment by the companies which will be at the range of tens of millions of dollars in the initial stage and may reach even higher at later stages.

“The ability to guarantee the needs of the local market while maintaining energy security and an attractive environment for investment is a top priority for all those involved in natural gas policy, and we are certain that this policy will bear fruit for the benefit of the energy market and the citizens of Israel.”

Israel is already a member of the gas exporters’ club. Last month, Chevron and its partners, NewMed and Ratio Energies, handed over an updated reservoir development plan to the Petroleum Commissioner at the Ministry of Energy and Infrastructures to boost their field’s capacity.

Recently, NewMed joined OMV Petrom as its new partner in an offshore block in Bulgaria’s part of the Black Sea ahead of the upcoming hydrocarbon exploration activities, which are anticipated to start at the block this year.