UAE-Israel ties strengthen further with offer for NewMed Energy

The United Arab Emirates’ state-owned oil and gas company and British Petroleum (BP) announced on Tuesday an offer to buy a stake in a major Israeli energy firm. The offer demonstrates the UAE’s continued interest in the Israeli gas sector despite political tensions. 

BP and Abu Dhabi National Oil Company (ADNOC) made a nonbinding offer to take Israel’s NewMed Energy private and purchase 50% of the company. The offer is consistent with BP’s plans to expand in the eastern Mediterranean where NewMed Energy operates. BP and ADNOC are planning to form a joint venture in the region, BP said in a press release. 

NewMed Energy’s stock rose more than 40% on Tuesday on the back of the news, closing at 10.12 shekels ($2.85) a share, according to data.

What it means: NewMed Energy, previously known as Delek Drilling, is a subsidiary of Israel’s Delek Group conglomerate. NewMed Energy is a publicly traded company on the Tel Aviv Stock Exchange. BP and ADNOC’s offer would make the company private by buying up the publicly traded shares. 

NewMed Energy said they received the offer on Monday. BP and ADNOC offered to pay 12.05 shekels ($3.40) for each share. This price is 72% higher than the closing price of 6.996 shekels ($1.97) on the Tel Aviv Stock Exchange, NewMed said in a press release. 

ADNOC and BP are offering to pay about $2 billion for the stake, valuing NewMed Energy at just under $4 billion, according to Reuters. 

Why it matters: The offer represents continued interest from the UAE in Israel’s booming gas sector. In 2021, Delek Drilling sold its stake in the Tamar gas field off the coast of Israel to the UAE state-owned Mubadala. 

The UAE has strongly criticized some statements and decisions made by Israel’s right-wing government this year, but economic cooperation between the two countries remains strong. In addition to the NewMed Energy offer, Israel and the UAE activated their free trade agreement on Sunday. 

Know more: ADNOC also announced on Monday an agreement to explore the viability of ammonia as a fuel source in northeast Germany’s North Rhine-Westphalia region, according to a press release. This followed ADNOC signing a gas supply deal with Germany last year as the European country seeks to reduce dependence on Russian gas. Israel is also looking to boost gas exports to Europe in response to the Ukraine war.