Israel's Delek Drilling signed a non-binding Memorandum of Understanding (MoU) with Abu Dhabi's Mubadala Petroleum to sell its stake in the Tamar gas field offshore Israel for $1.1 billion, the company announced on Monday.
The deal completion is expected by the end of May.
Under the Gas Framework, which is outlined in 2015 by the Government of Israel to attract additional operators and investors, and boost competition in the gas sector, Delek Drilling is obligated to selling all its holdings in the Tamar gas field by December 2021 because it also holds a 45.3% stake in the Leviathan gas field.
The Tamar field, which was discovered in 2009 and began to produce gas in 2013, is one of Israel's primary energy sources. Proven and probable reserves in the Tamar lease are estimated at 300 billion cubic meters of natural gas and 14 million barrels of condensate.
Delek holds a 22% stake in the field, which is operated by Chevron. The other partners in the Tamar project are operator Chevron with a 25% share, Isramco with a 28.7% stake, Tamar Petroleum with a 16.7% interest, Dor Gas with a 4% share, and Everest with a 3.5% stake.
Moreover, if finalized, the transaction will be the largest commercial agreement since Israel and the UAE agreed to normalize ties last year.
“This transaction has the potential to be another major development for commercial strategic alignment in natural gas in the Middle East, whereby natural gas becomes a source of collaboration in the region,” Yossi Abu, CEO of Delek Drilling, was quoted as saying in the statement.
He emphasized the development is not only a significant endorsement of the quality of the Tamar reservoir and the Levant basin but also a major support for the East Mediterranean natural gas sector.
"We are proud to have signed this MoU following the Abraham Accords Peace Agreement between Israel and the UAE," he added.
On Aug. 13, the UAE and Israel announced a US-brokered agreement to normalize relations, including opening embassies in each other's territory. The agreement, which is also known as the Abraham Accords Peace Agreement, was officially signed on Sept. 15 in Washington.
By Busranur Begcecanli