Delek’s Sale of East Med Stake to Mubadala Petroleum Hailed as First Fruits of Abraham Accords

Delek Drilling’s deal to sell Abu Dhabi’s state-owned Mubadala Petroleum its stake in Israel’s offshore Tamar gas field kicks off what the Abraham Accords envisioned as the kind of business cooperation that could bring peace to the Middle East and prosperity to the East Med.

The Leviathan platform.

Israel’s Delek Drilling is selling its 22% nonoperated stake in the Tamar gas field offshore Israel to Abu Dhabi’s Mubadala Petroleum for up to $1.1 billion in what would be, if finalized, the largest commercial agreement since Israel and the UAE signed the Abraham Accords Peace Agreement in August 2020.

Delek announced Tuesday it had signed a nonbinding memorandum of understanding (MOU) with Mubadala Petroleum, a wholly owned subsidiary of the Abu Dhabi government-owned Mubadala Investment Co. Delek said Mubadala would pay up to $1.1 billion for the stake,

Delek CEO Yossi Abu said the sale has “the potential to be another major development in our ongoing vision for natural gas commercial strategic alignment in the Middle East, whereby natural gas becomes a source of collaboration in the region.

“We are proud to have signed this MOU following the Abraham Accords Peace Agreement between Israel and the UAE,” Abu said, adding that he “would like to thank my counterparty at Mubadala Petroleum and our clients in Israel, Egypt, and Jordan.”

Mubadala Petroleum manages upstream oil and gas exploration and production assets in10 countries, with a primary geographic focus on the Middle East and North Africa, Russia, and Southeast Asia.

The company’s working interest in current production averages about 360,000 BOED, according to Mubadala’s website. Adding the Tamar gas field to its portfolio will only build on that as gas production ramps up in the Eastern Mediterranean.

US major Chevron became the operator of Tamar when it finalized the purchase of Noble Energy in the autumn of 2020 and so acquired Noble’s 25% interest in the field.

Net daily production in 2020 from the Tamar field averaged 173 MMcf/D of gas (51 MMcf/D attributed to Chevron in 2020), according to Chevron’s 2020 Annual Report Supplement.

In the report, Chevron noted: “Progress continues on the Tamar SW development, which consists of one well tied back to Tamar. The lease for this field covers approximately 15,000 net acres (62 sq km), and the current term expires in 2038.”

The Tamar field is located in the Leviathan basin near to where Chevron also operates the Leviathan gas field. Chevron holds a 39.66% stake under a lease which expires in 2044.

During 2020, production continued to ramp up from the Leviathan field, which averaged 242 MMcf/D of natural gas (64 MMcf/D attributable to Chevron in 2020), according to Chevron’s 2020 Annual Report Supplement. Chevron continues to progress its efforts to monetize its discovered resources at Leviathan field through a combination of domestic and regional export sales, the operator noted.

The Israeli government is requiring Delek Drilling to sell all of its holdings in Tamar by yearend 2021 under the country’s natural gas regulatory framework, according to Russia’s AK&M Information Agency.

Upon exiting Tamar, however, Delek Drilling will continue to play a major role in the East Med, owning a 45.3% stake in the Leviathan gas field and a 30% stake in the Aphrodite field offshore Cyprus, AK&M reported.

Other stakeholders in the Tamar field include Houston-based independent Isramco, 28.75%; Tamar Petroleum in which Delek has an interest, 9.25%; Israel’s Dor Gas, 4%; and Houston-based Everest, 3.5%, according to Delek’s website.