LNG

UK major BP and Abu Dhabi National Oil Company have decided not to proceed with a joint offer to take control of NewMed Energy, the Israeli natural gas company with LNG export plans and a supplier of pipeline gas to Israel, Egypt and Jordan.

A statement from NewMed said that the merger process was suspended because of the conflict in Gaza between Israeli military forces and the Hamas terrorist group and would not be proceeding in the near future.

The suspension would remain in force until discussions on an actual transaction resumed or were totally terminated.

“There can be no certainty that discussions will resume or that an agreement will be reached in the future, nor as to the terms of an agreement should one be reached,” explained NewMed.

“The NewMed Partnership will update unitholders of further developments as appropriate,” it added.

Suspension details

NewMed stated that the joint committee looking into the BP-ADNOC deal has agreed “due to the uncertainty created by the external environment” to suspend discussions in relation to the proposed transaction.

BP and ADNOC had previously made a non-binding offer in March 2023 to take NewMed Energy private and out of the Tel Aviv Stock Exchange through an acquisition of the free float listed shares and a partial acquisition of a stake still held by Israel's Delek Group.

The transaction would have resulted in BP and ADNOC holding 50 percent of NewMed Energy.

NewMed, a stakeholder with US major Chevron Corp. in the large Leviathan natural gas field offshore Israel, had previously approved budgets for 2023 including gas field development to provide feed gas for a floating LNG export project.

BP and ADNOC had intended to form a new joint venture that would have focused on “gas development in international areas of mutual interest including the East Mediterranean” region.

The proposed BP-ADNOC transaction followed a move by NewMed Energy itself to merge with Capricorn Energy of the UK but the Israelis later withdrew in February 2023 from that bid.

Main assets

The main NewMed asset, the Leviathan gas field, supplies the Israeli domestic market as well as exporting gas by pipelines to Egypt and Jordan.

The Leviathan project shareholders are the NewMed Partnership with 45.34 percent, Chevron subsidiary, Chevron Mediterranean Ltd with 39.66 percent, and Ratio Energies with 15 percent.

NewMed, which announced its name change from Delek Drilling to NewMed Energy in February 2022, also has a stake in the Aphrodite gas field in the offshore economic zone of Cyprus, making it one of the biggest players in the East Med.

Four months after the start of the Gaza conflict BP and ADNOC said in February 2024 that they had formed a joint venture in Egypt that would initially focus on natural gas and would incorporate Egyptian concession stakes held by BP.

That joint venture is expected to be formed in the second half of 2024 and will be 51 percent owned by BP and 49 percent by ADNOC.

The BP-ADNOC Egyptian joint venture was originally planned to be the second phase of cooperation between the two companies in the East Med gas and LNG province after the planned acquisition of the 50 percent stake in Israel’s NewMed.

NewMed Energy, a stakeholder with US major Chevron in the large Leviathan natural gas field offshore Israeli, has approved budgets for 2023 including gas field development to provide feed gas for a floating LNG project.

Israeli company Delek Drilling, the owner of natural gas resources in the East Mediterranean, is changing its name to NewMed Energy as it expands the Leviathan gas field, increases its exposure to the LNG market and pursues exploration licences in Morocco.

Chief Executive of former Delek Drilling and now of NewMed, Yossi Abu, said that the success in production from Leviathan in the past two years, and especially the successful realization of the regional exports, had in effect turned NewMed Energy into a leading energy entity of regional importance. 

“Analyses showing the demand for natural gas (both regional and domestic) is rising constantly and justifies the expansion of production from the Leviathan field, in accordance with the approved development plans for 21 billion cubic metres annually,” said Abu.

“The second phase of Leviathan will concentrate on expansion of the infrastructures for the transmission of natural gas from the reservoir to additional consumers in its export markets along with exposure to global LNG,” stated the NewMed Energy CEO.

The company said it was also in an advanced process for the receipt of exploration licenses in Morocco as a leading partnership in its field with considerable professional knowledge and a proven track record in regional activity.

Morocco plans

“NewMed Energy has identified Morocco as a country with tremendous potential in both geological and commercial terms,” said the company.

“The board has authorized NewMed Energy's management to act, and it is currently in advanced negotiations for receiving exploration licenses in offshore Morocco, in both the Mediterranean and the North Atlantic Ocean,” stated NewMed Energy.

NewMed Energy CEO Abu said the launch of the new brand name was part of a strategic process.

“With Delek Drilling's well-known DNA, NewMed Energy will be an innovative and leading energy entity that will maximize the value of the existing core assets and promote significant processes such as the expansion of Leviathan and the development of the Aphrodite (Cyprus) reservoir, alongside the launch of exploration and production of natural gas in other countries in the Middle East,” stated the CEO.

“Exactly as Delek Drilling was, NewMed Energy will continue to be a key energy anchor in the region, with the aim of giving our investors both a stable dividend yield and growth,” Abu declared.

NewMed Energy stated that the “natural gas revolution in Israel” which continues with the Leviathan field, has led to a reduction of around 70 percent in pollution as a result of gas-fired electricity generation in Israel, and to a significant reduction in greenhouse-gas emissions.

“A reduction in air pollution can also be seen in Egypt and Jordan, countries to which gas from Leviathan is exported,” it added.

Israeli energy company Delek Drilling has signed the final agreement for the US$1.1-billion sale of its 22 percent stake in Israel’s second-biggest natural gas resource, the Tamar field, to Mubadala Petroleum of the United Arab Emirates.

Delek Group, the Israeli company with natural gas assets in the East Mediterranean contributing to the region’s LNG and pipeline mix with supplies to Egypt and Jordan, returned to a first-quarter profit from a previous loss due to higher Leviathan gas field revenues.

The Israeli Energy Ministry said it asked US major Chevron Corp. to shut the Tamar natural gas field, which supplies Egypt and Jordan as well as Israel, because of continued rocket attacks on the city of Ashkelon, just 23 kilometres (14 miles) from the Tamar field’s offshore platform.

Israeli energy company Delek Drilling is advancing with the US$1.1-billion sale of its 22 percent stake in Israel’s second-biggest natural gas resource, the Tamar field, to Mubadala Petroleum of the United Arab Emirates by the end of May.

Delek Group, whose stakes in the offshore Leviathan and Tamar natural gas fields in the East Mediterranean make it a major supplier to Israel, Egypt and Jordan, posted a quarterly net loss as it prepares to welcome new partner Chevron and a possible LNG project after the US major’s agreed acquisition of Noble Energy.

The Tamar and Leviathan fields in Israeli territorial water have combined reserves of around 30 trillion cubic feet of gas

Delek Group said it ended second quarter with a net loss of 326 million Israeli shekels ($97M), mainly arising from one-time accounting provisions.

Delek said the drop in energy prices and the lockdowns applied in Israel and around the world, the group’s revenues in the quarter were 1.94 billion shekels ($577M), similar to the corresponding quarter last year, driven by a sharp rise in the Group’s revenues from core operations offshore Israel and in the North Sea.

The group’s Delek Drilling subsidiary holds the natural gas stakes and it completed the refinancing of the Leviathan field with a $2.25 billion loan.

Delek Drilling has noted that in recent weeks, after the reporting period, there had been a “significant increase” in demand for natural gas.

Revenues from the sale of gas in Israel net of royalties rose by 64 percent in the second quarter to 498 million shekels ($148M) compared with revenues of 304M shekels in the same three months of 2019.

“The increase was mainly due to the start of gas production from Leviathan, and the sales to the local market as well as exports to Egypt and Jordan,” said Delek.

The major increase in sales of natural gas and condensate led to a growth in operating profit before one-time provisions were made.

Chevron agreed in July 2020 to acquire Houston-based Noble Energy and its assets in US shale basins and the East Med, including the Leviathan and Tamar fields.

The definitive agreement valued at $5Bln between Chevron and Noble has been approved by both boards and is expected to close in the fourth quarter.

Delek Drilling has said the acquisition could mean the development of LNG export project.

“Chevron brings a significant LNG capability into the Leviathan project,” the Israeli company said at the time.

Delek also runs a UK North Sea oil and gas business through its subsidiary Ithaca Energy.

The Israeli company said Ithaca’s revenues in the quarter were 971M shekels ($290M) compared with revenues of 350M shekels in the parallel quarter last year.

Delek said average daily output by Ithaca amounted to 70,400 barrels of oil equivalent per day compared with 15,200 boe/d in the same quarter of 2019.

Delek had acquired the North Sea fields from new East Med partner Chevron.

The company’s provisions in the earnings came in relation to the disposal of two subsidiaries, Cohen Development and Phoenix.

As the quarterly results were announced, Delek noted that Bill Dunnett had been appointed as CEO of Ithaca.

Dunnett, an engineer by training, has 35 years of experience in the field of energy and gas, during which time he served as CEO of Repsol Sinopec Resources UK and in a range of senior positions in leading energy companies, including Shell, Petrofac and Halliburton.

“Delek Group’s core operations continued to demonstrate strong performance in the second quarter,” said Idan Wallace, President and Chief Executive of Delek Group.

“Major steps to strengthen both capital and collateral that the company completed during and following the reporting period, provide a tailwind to continue with the successful implementation of the Group’s strategy,” he added.

Chevron Corp., the US major and operator of two world-class LNG export plants in Western Australia, has agreed to acquire Houston-based Noble Energy and its assets in US shale basins and the East Mediterranean, including the Leviathan and Tamar gas fields offshore Israel.

Delek Group, a stake holder in the East Mediterranean Tamar and Leviathan natural gas fields supplying Egypt, Israel and Jordan increased revenues by 88 percent and boosted operating income.