Israel awards natural gas exploration licences to BP, Socar and NewMed

Israel awarded licences to BP BP.L, Azeri national oil firm Socar and local company NewMed Energy NWMDp.TA on Monday to explore for natural gas in Israeli waters as the country seeks to boost domestic gas reserves and expand exports.

In 2023 the trio jointly placed a bid for two offshore blocks in a fourth licensing round. Israel's Energy Ministry said that additional licences are expected to be granted and a fifth bidding round is planned for later this year.

As part of the licences for the so-called Cluster I near the Leviathan field, Socar will act as operator of the exploration consortium while BP will be involved in Israel's natural gas sector for the first time. NewMed is already the largest stakeholder in Leviathan, the giant offshore field operated by Chevron CVX.N.

Each company will hold about a third of the rights in each licence.

Cluster I is a 1,700 sq km area located in the Mediterranean at the northern part of Israel's economic waters. The consortium is expected to conduct seismic and geological surveys in the first phase of exploration, with drilling in a second phase based on survey results.

"Natural gas is a strategic asset that strengthens our economic and diplomatic standing worldwide, particularly in the Middle East," said Energy Minister Eli Cohen. "That’s why we are working to expand natural gas production for both the domestic market and exports, especially in these times."

The gas-rich offshore basin straddling Egypt, Israel, Cyprus and Lebanon has drawn some of the world's top energy companies in recent years, particularly as Europe scrambles to secure supplies to replace Russian gas in the wake of Russia's invasion of Ukraine.

Israel is positioning itself as a regional energy hub and has committed to supplying natural gas to Europe, which has been diversifying away from Russia.

Exploration for oil and gas resources is a high-risk, high-reward business that includes seismic surveys and the drilling of wells, a process that can take several years.

The ministry reported this month that Israel's natural gas exports to Egypt and Jordan rose 13.4% in 2024.