London-based British Petroleum (BP.L) and Azerbaijan's state oil company Socar have made their first bid in an Israeli licensing round for natural gas exploration, indicating growing international interest in the Eastern Mediterranean basin, sources familiar with the matter reported.
BP and Socar, in partnership with Israel's NewMed Energy (NWMDp.TA), jointly submitted a bid for two offshore blocks in the recently concluded fourth licensing round, said four sources from the companies and industry. The move follows BP and Abu Dhabi's Adnoc's joint offer four months ago to acquire a 50% stake in NewMed for approximately $2bn, potentially granting them access to Israel's expanding energy sector.
The gas-rich offshore basin spanning Egypt, Israel, Cyprus, and Lebanon has attracted major energy companies globally in recent years, particularly as Europe seeks alternative gas supplies to replace Russian imports following the conflict between Russia and Ukraine.
NewMed, which holds the largest stake in the Chevron-operated Leviathan offshore field, producing 12bn cubic meters (bcm) of gas supplied to Israel, Egypt, and Jordan, led the consortium bid with BP and Socar. The bid targeted blocks in proximity to the Leviathan and Tamar fields.
BP declined to provide a comment, while Socar did not respond to the request for comment. NewMed, in a regulatory filing, confirmed its participation in the bidding process as part of a consortium with "international companies." The Israeli Energy Ministry refrained from commenting on specific company names, stating that four consortiums, involving nine different companies, submitted six bids during the auction. Notably, five of the companies do not currently operate in the Eastern Mediterranean basin. The winners of the auction will be announced in the fourth quarter.
Exploration for oil and gas resources entails significant risks and potential rewards, including seismic surveys and well drilling, a process that may span several years. While the chances of discovering substantial reserves similar to Leviathan or Tamar are low, uncovering smaller resources is crucial for expanding the size and lifespan of existing fields.
Additional companies also participated in the licensing round. Energean (ENOG.L), which operates the offshore Karish field in Israel, submitted bids for blocks in Zone I, as per the sources. Energean declined to comment on the matter. Ratio Energies (RATIp.TA), holding a 15% stake in the Leviathan field, also made a bid for blocks in Zone G, the sources disclosed. Ratio, in a regulatory filing, confirmed its consortium's participation but refrained from providing further details, with a spokesperson declining to comment.
The increasing interest from international energy companies in Israel's offshore gas reserves reflects the significant potential in the Eastern Mediterranean basin and the evolving dynamics of the global energy market.
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