On Monday, Israel‘s Delek Drilling announced that it has signed a non-binding Memorandum of Understanding (MoU) with Mubadala Petroleum, the oil and gas upstream/exploration subsidiary of Abu Dhabi sovereign wealth fund Mubadala Investment Corporation, for the sale of Delek’s minority (22 percent) stake in Israel‘s Tamar offshore natural gas field. If finalized, the transaction will be the largest commercial agreement to date following the August 2020 Abraham Accords, the comprehensive peace agreement that normalized relations between Israel and the United Arab Emirates.
“This transaction 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,” Delek Drilling CEO Yossi Abu said in an official comment on the MoU. “We are proud to have signed this MoU following the Abraham Accords Peace Agreement between Israel and the UAE. 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 natural gas sector. I would like to thank my counterpart at Mubadala Petroleum and our clients in Israel, Egypt and Jordan.”
Discovered in 2009, the Tamar field is located approximately 90 km west of Haifa, off the coast of Israel, at an overall depth of around 5,000 meters below sea level, and in waters that are 1,700 meters deep.
Production began in 2013, with natural gas extracted through five production wells at the Tamar field. The gas flows through two approximately 140 km pipelines to the primary and main processing facility on the Tamar Platform where most of the gas processing takes place. Gas is carried from the platform via pipeline to an onshore terminal at the Port of Ashdod, and into the Israeli market through the INGL national gas pipeline. Some gas is then exported to Jordan and Egypt.
According to Delek, gas from Tamar is already playing a critical role in decarbonizing the region, as gas-produced electricity rapidly replaces electricity derived from coal. If finalized, the transaction will also complement Mubadala Petroleum’s gas-skewed portfolio strategy, in alignment with its ESG considerations and energy transition goals.
Existing partners in the Tamar project are Delek Drilling, Chevron (25 percent and operator), Isramco (28.75 percent), Tamar Petroleum (16.75 percent), Dor Gas (4%) and Everest (3.5%). 2P reserves in the Tamar lease, after production of more than 69.3 BCM, is approximately 300 BCM of Natural Gas and 14 million barrels of condensate. Under the Israeli government’s Gas Framework, Delek Drilling is required to sell all of its holdings in Tamar by the end of 2021.
Post-sale of Tamar, Delek Drilling will own a 45.3% stake in the giant Leviathan gas field offshore Israel which has 2P reserves of 22.8 tcf (649 bcm) of gas and 41m mmbbl of condensate, production capacity of 1.2 bcf/d and the multi-decade reserve life; and a 30% stake in the Aphrodite field offshore Cyprus with 2C resources of 3.5tcf. The Company has a low risk growth strategy to grow reserves and production from its existing asset base. The Company will also expand its exploration portfolio in the Mediterranean region to grow resources and invest in energy transition technologies.
