ADNOC, BP pause $2bn NewMed acquisition talks due to Palestine conflict
Discussions regarding an offer made by British energy supermajor BP and UAE’s ADNOC to buy a 50% stake in Israel-based gas producer NewMed Energy were suspended due to the escalating Israel-Palestine conflict.
Since the conflict began shipping has been affected by attacks from Houthi rebels on vessels in the Red Sea in support of Palestine. Oil and gas also saw trouble with some fields being ordered to temporarily halt production due to safety concerns. Now, the M&A side of oil and gas businesses has also been affected.
NewMed Energy said that the companies agreed to suspend discussions regarding the proposed transaction “due to the uncertainty created by the external environment” – an embellished way to describe the events going on since October.
The Israeli firm said that there was no certainty that discussions would resume or that an agreement would be reached in the future. However, BP and ADNOC did reiterate their interest in the proposed transaction.
The two made a non-binding offer to take NewMed Energy private with BP and ADNOC holding 50% of the company as a result – a 45% stake in NewMed would be acquired via the acquisition of free-floating shares while a 5% stake would be bought from Israeli conglomerate Delek Group.
At the start of the conflict in October 2023, BP’s head of gas and low-carbon energy Anja-Isabel Dotzenrath told investors that the company was “very optimistic” about the deal regardless of the situation at the time.
This contrasted with warnings from industry experts who claimed that a rise in civilian fatalities would make it politically unacceptable for ADNOC to move ahead. The civilian fatalities rose massively over the following months and the situation regarding the deal is now a lot more complicated.
Regardless, NewMed is a good acquisition target for BP and ADNOC as it holds a 45.3% stake in Israel’s massive Leviathan offshore gas field. Chevron owns 39.7% and Ratio holds the remaining 15% of Leviathan.
Chevron, a stakeholder in Leviathan, was ordered by Israel to halt production in one of its fields in Israel in October last year. Israel halted production at the US major-operated Tamar gas field due to security risks. In its rationale, Israeli authorities said that the stoppage was ordered due to the platform’s visibility from the northern Gaza Strip on a clear day and it being within range of rocket fire. Since then, the field resumed production.
Apart from Leviathan, NewMed also holds a 30% stake in the Aphrodite natural gas field offshore Cyprus along with Chevron and Shell. Also, the company holds a stake in an exploration block in the Israeli EEZ adjacent to the Leviathan field in partnership with BP and SOCAR.
