UAE-Israel ties strengthen further with offer for NewMed Energy
United Arab Emirates oil and gas company British Petroleum (BP) announced on Tuesday an offer to buy a stake in a major Israeli energy firm. The offer reflects the UAE’s continued interest in Israel’s gas sector despite political tensions.
BP and Abu Dhabi National Oil Company (ADNOC) made a non-binding offer to take Israel’s NewMed Energy private and buy 50% of the company. The offer is in line with BP’s plans to expand in the eastern Mediterranean where NewMed Energy operates. BP and ADNOC plan to establish a joint venture in the region, BP said in a press release.
NewMed Energy stock rose more than 40% Tuesday on the back of the news, closing at 10.12 shekels ($2.85) a share, according to data.
What it means: NewMed Energy, formerly known as Delek Drilling, is a subsidiary of Israel’s Delek Group. NewMed Energy is a publicly traded company on the Tel Aviv Stock Exchange. BP and ADNOC’s offer would take the company private by buying the publicly traded shares.
NewMed Energy said it received the offer on Monday. BP and ADNOC offered to pay 12.05 shekels ($3.40) per 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’s important: The offer reflects 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 UAE state-owned Mubadala.
The UAE has strongly criticized several 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 bid, Israel and the UAE activated their free trade agreement on Sunday.
More information: ADNOC also announced on Monday an agreement to explore the viability of ammonia as a fuel source in Germany’s Northeast North Rhine-Westphalia region, according to a press release. This came after ADNOC signed a gas supply agreement with Germany last year as the European country seeks to reduce dependence on Russian gas. Israel also wants to boost gas exports to Europe in response to the war in Ukraine.