Israel and Azerbaijan’s state oil firm set to seal plan for offshore gas exploration
Azerbaijan’s SOCAR along with Israel’s NewMed Energy and British oil and gas company BP win natural gas exploration licenses for blocks in proximity to the Leviathan reservoir
Sharon Wrobel is a tech reporter for The Times of Israel.
Israel and Azerbaijan are expected to sign a work plan as early as this month for the exploration and discovery of offshore natural gas reservoirs in the country’s economic waters.
Azerbaijan State Oil Company (SOCAR) is part of a consortium including British multinational oil and gas firm BP and Israel’s NewMed Energy that won a tender for exploration licenses from Israel’s Energy Ministry in October 2023 to drill in offshore fields in areas adjacent to the country’s Leviathan field, one of the world’s largest deep-water gas discoveries.
Progress in the exploration of natural gas off the country’s Mediterranean coast has been delayed due to the outbreak of war with Hamas following the terror group’s onslaught on southern communities on October 7, 2023.
Next week, an official SOCAR delegation is set to arrive in Israel to sign a previously announced deal to acquire a 10 percent stake in the Tamar natural gas reservoir off the country’s Mediterranean coast from Israeli businessman Aaron Frenkel, The Times of Israel has learned. As part of the visit, Azerbaijan’s state oil company and its partners are expected to seal and sign a work plan with Israel’s Energy Ministry to search for gas.
The Energy Ministry declined to comment on the visit. SOCAR did not immediately respond to requests for comment.
SOCAR, which has a 33.34% interest in the consortium, will be the designated operator of the natural gas exploration venture. The license is granted for an initial period of three years. During this period of time, the license holders will perform exploratory work on the entire license areas. After drilling at least one well and carrying out the additional work plan, license holders can extend the license period in the cluster by two additional years, and up to a maximum of seven years.
The Republic of Azerbaijan’s alliance with Israel is a complicated one due to it sitting on Iran’s border, the same geography that makes it an enticing strategic partner for Jerusalem. The Shiite-majority country closely allied with Turkey has seen its partnership with the Jewish state flourish in recent years in the wake of Israeli support for Azerbaijan during its conflict with Armenia.
Israel is one of Azerbaijan’s leading arms suppliers. It has, in turn, supplied Israel with significant amounts of oil in addition to reported cooperation against Iran.
The expansion of relations in Israel’s energy sector comes as SOCAR is acquiring strategic assets in foreign countries to boost its production footprint and expand exports to Europe via Turkey.
Since Israel first discovered natural gas fields off its Mediterranean coast more than a decade ago, the country has emerged as a gas exporter. The natural gas operations have put the country on a path to energy independence in a region with few natural resources.
Major offshore discoveries, including the Leviathan field, which contains an estimated 22 trillion cubic feet of gas, have attracted large oil and gas explorers, such as US energy giant Chevron, to partner with local companies.
In 2020, Israel started pumping natural gas to Egypt from the Leviathan gas field. Israel, Egypt and the European Union have also signed a memorandum of understanding that could see Israel export its natural gas to the bloc for the first time.
Meanwhile, growing domestic energy needs have sparked heated discussions in Israel over the allowance of natural gas exports that could endanger Israel’s energy security and lead to higher electricity prices. About a year ago, an inter-ministerial committee on natural gas policy, headed by Energy Ministry director-general Yossi Dayan, was set up to discuss the country’s export policy and competition in the local energy sector. The committee is expected to publish its recommendations in the coming weeks.
Times of Israel staff contributed to this report.
