Mubadala Petroleum, the wholly-owned subsidiary of Abu Dhabi’s sovereign wealth fund, has signed a preliminary non-binding agreement with Israel’s natural-gas field for a deal worth $1.1 billion.
The Abu Dhabi-based company has agreed to a Memorandum of Understanding (MoU) to buy Delek Drilling LP’s 22 percent stake in the Tamar offshore field in the Mediterranean. If finalized, the transaction will be the largest commercial agreement since the signing of the Abraham Accords.
“The proposed transaction is in line with our strategy of seeking high quality, value accretive and environmental, social and governance (ESG)-compliant investments that strengthen our gas-biased portfolio in line with our energy transition targets,” Mubadala Petroleum said in a statement.
Israel has recorded a surge in gas from exploration work in the Tamar and Leviathan gas fields in the Mediterranean. There has been growing interest from the Gulf in the potential of the Eastern Mediterranean for further discoveries.
As part of the preliminary agreement between Mubadala Petroleum and Delek Drilling, the Israeli firm will sell its 22 percent interest in the Tamar and Dalit leases, as well as the partnership’s rights in the joint operating agreement governing the leases.
Other partners in the Tamar concession are Noble Energy that has a 25 percent stake, Isramco which retains a 28.75 percent interest, Tamar Petroleum which holds a 16.75 percent stake, Dor Gas and Everest with a 4 percent and 3.5 percent interests, respectively.
If the sale of Delek’s share proceeds successfully, Mubadala Petroleum will make an unconditional investment of $1billion and a contingent payment of up to $100 million, which will be subject to terms and conditions in the definitive agreement.
The approvals of the petroleum commissioner and consents from various parties in the concession will be included in the definitive agreement. A definitive agreement is expected to be finalized no later than May 31, 2021, according to Delek Drilling.