In biggest-yet Israel-UAE deal, Delek to sell stake in Tamar gas field for $1.1b

Israeli energy giant Delek Drilling announced Monday that it had signed a memorandum of understanding to sell its entire stake in Israel’s Tamar offshore gas field to the Abu Dhabi government-owned Mubadala Petroleum, potentially handing the United Arab Emirates a major share in one of the Jewish state’s key strategic and economic assets less than a year after the countries established diplomatic ties.

The deal for the 22 percent stake is worth $1 billion, with an additional $100 million conditioned on certain terms and goals being met, according to a notification about the agreement sent by Delek Drilling to the Tel Aviv Stock Exchange and the Israel Securities Authority. The companies said they aim to finalize the deal by May 31.

If completed, the deal will be the biggest commercial agreement made so far since Israel and the UAE signed a normalization pact in August 2020, brokered by former US president Donald Trump.

Get The Start-Up Israel’s Daily Start-Up by email and never miss our top stories Free Sign Up

“This transaction has the potential to be another major development in our ongoing vision for Natural Gas commercial strategic alignment in the Middle East, whereby Natural Gas becomes a source of collaboration in the region,” Yossi Abu, CEO of Delek Drilling, was quoted as saying in the statement. “The development is not only a significant endorsement of the quality of the Tamar reservoir and the Levant basin but also a major support for the East Mediterranean Natural Gas sector.”

Under the terms of the so-called gas framework, drawn up by the Israeli government in 2015 to regulate the domestic natural gas market and allow a competitive and decentralized structure, Delek — owned by tycoon Yitzhak Tshuva — was required to sell off its non-operated stake in Tamar by the end of 2021.

The other partners in Tamar are Noble Energy Mediterranean Ltd. (25%), Isramco Negev-2 Limited Partnership (28.75%), Tamar Petroleum Ltd. (16.75%), Dor Gas Exploration Limited Partnership (4%), and Everest Infrastructures Limited Partnership (3.5%).

Mubadala Petroleum is an international oil and gas exploration company, mostly focused on the Middle East, North Africa, Russia, and Southeast Asia, though it has assets in 10 other countries. It is a subsidiary of the Mubadala Investment Company, which is owned by the government of Abu Dhabi.

Discovered in 2009, the Tamar field is located in Israel’s Exclusive Economic Zone, about 90 kilometers west of Haifa in the Mediterranean Sea. It contains around 369 billion cubic meters of recoverable reserves.

Production from the field is piped to a processing facility 25 kilometers off the coast of Ashkelon and another facility opposite the port city of Ashdod.

Six wells at Tamar have an annual production of 11 billion cubic meters, according to Delek figures. In addition to providing natural gas for Israel, some of the gas is also exported to Egypt and Jordan.

The normalization deal between Israel and the UAE, the so-called Abraham Accords, also included normalizing ties with Bahrain. Since then Israel has moved to normalize relations with Sudan and Morocco.

The accords have brought a rush of other major investments, including deals between Israel’s Bank Hapoalim and two financial centers in the UAE.