Tel Aviv - Israel has granted licenses to British company BP, Azerbaijan’s state-owned Socar, and local NewMed Energy for natural gas exploration in the Mediterranean Sea, a strategic move aimed at enhancing its local gas reserves and expanding its export capabilities. This decision, announced on March 18, 2025, reflects Israel's intent to play a vital role in regional energy dynamics.
In a joint offer made in 2023, the three companies sought exploration rights in two marine areas during Israel's fourth licensing round. According to the Israeli Ministry of Energy, additional license grants are anticipated, and a fifth bidding round will occur later this year.
As part of the licensing agreement, Socar will operate the exploration alliance in an area called "Cluster 1", adjacent to the Leviathan gas field. Notably, BP will enter the Israeli natural gas sector for the first time. The agreement grants Socar a foothold in significant Israeli assets, coming on the heels of its recent acquisition of a 10% stake in the Tamar gas field earlier this year.
This agreement comes in a critical period when Israel is seeking to deepen its ties with Azerbaijan, strategically important in counterbalancing neighboring Iran. Both countries have established mutual dependencies in energy and defense sectors, enhancing their cooperation amid ongoing regional tensions. Baku has supported Prime Minister Benjamin Netanyahu's government during the broader geopolitical conflicts in the Middle East.
NewMed Energy has emerged as a primary contributor to the Leviathan offshore field, which is operated by Chevron. Each participating company will hold about one-third of the rights in the newly licensed areas. The Cluster 1 area spans approximately 1,700 square kilometers and lies in the northern section of Israel's economic waters in the Mediterranean.
In the initial phase, the alliance is expected to conduct geological and seismic surveys, with drilling commencing in a later phase, contingent on the outcomes of these surveys. Eli Cohen, Israel's Minister of Energy, stated, "Natural gas is a strategic resource that enhances our economic and diplomatic position globally, especially in the Middle East. That is why we are working to expand our natural gas production for local markets and exports, especially under current conditions."
The rich gas basin located between Israel, Cyprus, Lebanon, and Egypt has attracted major global energy firms over recent years, particularly as Europe seeks to secure alternative gas supplies following the Russian invasion of Ukraine. Israel is increasingly positioning itself as a regional energy hub, committed to supplying natural gas to Europe as it diversifies its energy sources away from Russia.
Additionally, the Ministry of Energy highlighted earlier this month that Israel's natural gas exports to Egypt and Jordan saw a significant increase of 13.4% in 2024, marking a growing trend in regional energy cooperation. The Mediterranean gas market is becoming more competitive as firms explore and exploit available resources amid rising global energy demand.
Exploring for oil and gas is recognized as a high-risk, high-reward undertaking, typically involving extensive seismic surveys and drilling activities that can span several years. As these three companies embark on this new exploration venture, eyes will be on the developments in the region that not only promise economic benefits for Israel but could also reshape the geopolitical landscape.
The cooperation between Israel and Azerbaijan highlights the interdependence of energy resources and defense strategies in an era marked by rising tensions and the quest for energy security. As Israel continues to assert itself as a vital player in regional energy markets, it also grapples with the complexities of political relations in the Middle East and beyond.
