More action needed before Israel grants multiple exploration blocks to SOCAR, NewMed, and BP

Israel’s Ministry of Energy has set its cap on approving the award of six licenses in a fourth competitive process for natural gas exploration in the State of Israel’s Exclusive Economic Zone (EEZ) to Azerbaijan’s SOCAR, NewMed Energy – former Delek Drilling – and Britain’s BP. However, several items are required to be ticked off the list before these licenses can be granted.

Back on July 17, 2023, NewMed confirmed that it had submitted a bid to participate in the fourth Offshore Bidding Round, which was published by the Ministry of Energy on December 13, 2022, for natural gas exploration in the EEZ of the State of Israel. The bid was submitted in the context of a joint venture, which includes the company and additional international energy players. One of these was expected to act as the operator of the JV.

According to NewMed, 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 the company, together with SOCAR, which was defined as the operator, and BP Exploration Operating Company Limited (BP).

To complete the license granting process, the notice underlines that it is necessary to undertake several actions, 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.

In line with the rules of the Tel Aviv Stock Exchange and the partnership agreement, NewMed plans to participate only in oil and gas exploration activity in projects that are or will in the future be defined in the partnership agreement.

Therefore, the company intends to summon “a special general meeting of the holders of the partnership’s participation units, on whose agenda is amendment of the partnership agreement and the addition of the licenses to the list of petroleum assets specified therein, in a manner that will allow the partnership to participate in exploration and production activity in the areas of the licenses,” outlined NewMed.

After the merger agreement with the UK-based Capricorn Energy, formerly known as Cairn Energy, was dropped following Capricorn’s board changes, the Israeli player revealed that BP and ADNOC made a non-binding offer in March 2023 to take NewMed Energy private through an acquisition of the free float and partial acquisition of Delek’s stake. 

Following the rekindled conflict between Israel and Palestine, which started on October 7, 2023, during a major Jewish holiday, Chevron had to shut down the Tamar platform. Even though the impact on the oil and gas prices will most likely be limited unless the U.S. and Iran along with other supporters of both countries decide to get directly involved, the potential to widen the war into regional hostilities should not be ignored as the death toll keeps rising.

Therefore, measures need to be taken to stop further escalations and end the current conflict by finally reaching a proper peace agreement between Israel and Palestine not just for the sake of global markets but primarily to preserve human life, which is the most important aspect that would put an end to further suffering for citizens in both countries.