Israel's Delek Drilling has agreed the sale of its 22% stake in the Tamar gas field offshore Israel with the UAE's Mubadala Petroleum under a non-binding memorandum of understanding announced April 26.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Delek must sell its stake in the Chevron-operated Tamar -- which began producing gas in 2013 -- by the end of this year under a government framework to open the Israeli gas sector to competition. Delek also has a 45.3% stake in the larger Leviathan gas field.
In a statement April 26, Delek said it would work with Mubadala to finalize a definitive agreement "expeditiously" by May 31.
It said it would not enter into any agreement with any other party for the sale of the 22% Tamar stake until that date.
If finalized, the transaction with Mubadala would be the largest commercial agreement following the normalization treaty between the UAE and Israel signed in August 2020.
Delek said Mubadala would pay up to $1.1 billion for the stake, consisting of an unconditional payment of $1 billion and a contingent payment of up to $100 million subject to certain terms and goals being met.
The deal would also include Delek's 22% stake in the Dalit gas lease.
Yossi Abu, CEO of Delek Drilling, said: "This transaction has the potential to be another major development in our ongoing vison for gas commercial strategic alignment in the Middle East, whereby gas becomes a source of collaboration in the region."
"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 gas sector," Abu said.
Chevron is operator at Tamar with a 25% stake after it bought previous owner Noble Energy last year. The other shareholders are Isramco (28.75%), Tamar Petroleum (16.75%), Dor Gas (4%) and Everest (3.5%).
Tamar has produced more than 69 Bcm of gas since it started up in 2013, and has remaining 2P reserves of some 300 Bcm, Delek said.
Gas is produced by five production wells which flow through two 140 km pipelines to the primary and main processing facility on the Tamar platform where most of the gas processing takes place.
Gas is then transmitted from the platform through a pipeline to an onshore terminal in Ashdod, and into the Israeli market through the INGL national gas pipeline.
Some Tamar gas is also exported to Jordan and Egypt.
"Gas from Tamar is playing a critical role in decarbonizing the region as gas-produced electricity rapidly replaces electricity derived from coal," Delek said.
If finalized, the transaction will complement Mubadala's gas-biased portfolio strategy, it said.