BP and ADNOC buying stake in Israel’s NewMed for nearly $3.99 billion

UK-headquartered energy giant BP and the UAE’s Abu Dhabi National Oil Company (ADNOC) have made a non-binding offer to take NewMed Energy private through an acquisition of the free float and partial acquisition of Delek’s stake, which would result in the two players holding 50 per cent in the Israeli oil and gas firm.  

BP explained on Tuesday, 28 March 2023, that it was planning to form a new joint venture with ADNOC, focused on gas development in international areas of mutual interest, including the East Mediterranean. The oil major highlighted that the proposed acquisition of a partial stake in NewMed Energy would be “a significant first step” in establishing the joint venture together with ADNOC.

Upon completion, this is expected to strengthen the broader strategic partnership between ADNOC and BP across oil and gas, hydrogen and carbon capture and storage (CCS) technology, deepening the two players’ long-standing relationship.  

According to BP, the proposed acquisition is consistent with its stated strategy and financial frame, including current guidance for capital expenditure. ADNOC and BP intend to explore a range of mechanisms for the formation and potential further expansion of their new partnership. 

In a separate statement, NewMed Energy confirmed that BP and ADNOC had submitted an offer to purchase 50 per cent interest in the company at a value of NIS 14.1 billion (almost $3.99 billion). The offer is NIS 12.05 or about $3.41 per participation unit, reflecting a premium of about 72 per cent on the market price on the eve of the offer.

Moreover, the firm outlines that the proposal is for the purchase of all the participation interest held by the public (45 per cent) and 5 per cent of the stake held by the Delek Group. Once this acquisition is complete, BP and ADNOC will hold 50 per cent and Delek Group the remaining 50 per cent of the capital and controlling rights in NewMed. 

Regarding NewMed’s plans for the future, Yossi Abu, CEO of NewMed Energy, remarked: “We are now determined to accelerate the moves to expand Leviathan and build a floating liquefaction facility, which will allow Israeli gas to reach every corner of the globe within a few years.

“After the natural gas revolution brought economic stability to energy prices in the domestic market and contributed to the stability and fabric of Israel’s relations with its neighbours, our next goal is to increase production volumes and export Israeli gas to Europe and the Far East.”

When it comes to NewMed’s recent activities, it is worth noting that the Israeli player’s previously announced merger agreement with the UK-based Capricorn Energy, formerly known as Cairn Energy, was dropped following Capricorn’s board changes.

In addition, NewMed Energy inked deals with Adarco Energy Limited and Morocco’s National Office of Hydrocarbons and Mines (ONHYM) in December 2022 for natural gas and oil exploration and production activities in a license located off the coast of Morocco in the Atlantic Ocean.