BP and UAE Oil Company Pause $2 Billion Deal with Israeli Gas Producer Amid Gaza Conflict
In a bold move, BP and an oil company owned by the United Arab Emirates have decided to halt negotiations to acquire a 50% stake in Israel’s leading natural gas producer. The reason? The ongoing war in Gaza has made the $2 billion deal appear too risky.
NewMed Energy announced on Wednesday that all three companies involved had agreed to “suspend discussions” on the deal due to the uncertainty caused by the external environment. BP and Abu Dhabi’s state oil company Adnoc expressed their continued interest in the proposed transaction, but no specific conditions for resuming talks were provided.
“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,” stated NewMed Energy.
Following the announcement, NewMed Energy’s shares plummeted by as much as 7% in Tel Aviv, reflecting the impact of the Gaza conflict on businesses in the region. The war has led to boycotts of several Western brands in the Middle East, including Starbucks, McDonald’s, KFC, and Pizza Hut, due to perceived ties to or support for Israel.
The proposed investment in NewMed Energy by BP was initially announced nearly a year ago as part of a joint venture with Adnoc to extract natural gas in the eastern Mediterranean. This move was seen as a sign of strengthening financial ties between Israel and the UAE following the normalization of diplomatic relations in 2020. However, the war has strained these ties, with the UAE calling for an immediate ceasefire in Gaza.
Despite the conflict, BP and Adnoc were set to acquire 50% of NewMed Energy by purchasing the company’s publicly traded shares and a portion of the stake held by Israeli energy conglomerate Delek. NewMed Energy owns a significant share of the Leviathan Reservoir, home to one of the world’s largest deepwater gas discoveries.
While the deal with NewMed Energy is on hold, BP and Adnoc are still collaborating on other projects. Just last month, they announced a joint venture to develop natural gas assets in Egypt, showcasing their ongoing commitment to working together in the region.
