Oil & Gas

Israel's Energy Ministry recently awarded licences to BP, Azeri national oil firm Socar, and local company NewMed Energy to explore for natural gas in Israeli waters. This move is part of Israel's strategy to boost its domestic gas reserves and expand its exports, especially in the context of rising demand for energy in Europe. The three companies jointly bid for two offshore blocks in Israel's fourth licensing round in 2023, with additional licences expected to be granted later this year, including a fifth bidding round.

The awarded licences are for Cluster I, a 1,700 square kilometer area near the Leviathan gas field, one of the largest offshore fields in the Mediterranean. Socar will serve as the operator of the exploration consortium, while BP will enter Israel’s natural gas sector for the first time. NewMed Energy, already the largest stakeholder in the Leviathan field, will also hold a significant share in these new licences. Each company will control about one-third of the rights in the exploration venture, setting the stage for collaborative development in the region.

Cluster I is located in Israel’s economic waters in the northern Mediterranean, and the consortium will begin its exploration efforts with seismic and geological surveys. The second phase of exploration will include drilling, depending on the survey results. Israel’s Energy Minister, Eli Cohen, emphasized that "natural gas is a strategic asset" that enhances the country's economic and diplomatic standing, particularly in the Middle East, as it works to increase production for both domestic needs and export opportunities.

The discovery of vast natural gas reserves in the Eastern Mediterranean has positioned Israel as a potential regional energy hub. With increasing exports to Egypt and Jordan, and a focus on supplying Europe with alternative energy sources, Israel is securing its place as a key energy player in the Middle East. This development is especially important in the aftermath of Russia's invasion of Ukraine, which has prompted Europe to seek alternative sources of natural gas.