Israel and Azerbaijan are expected to sign a work plan as early as this month for the exploration and development of offshore natural gas reservoirs within Israel’s economic waters.
The Azerbaijan State Oil Company (SOCAR) is part of a consortium that includes British multinational BP and Israel’s NewMed Energy. In October 2023, this consortium won a tender from Israel’s Energy Ministry for offshore exploration licenses in areas adjacent to the Leviathan field, one of the world’s largest deep-water gas discoveries.
Progress on offshore gas exploration has been delayed due to the ongoing war with Hamas, which erupted following the terror group’s attack on southern Israeli communities on October 7, 2023.
SOCAR Delegation to Finalize Tamar Stake Acquisition
Next week, an official SOCAR delegation will visit Israel to finalize a previously announced deal to acquire a 10% stake in the Tamar natural gas reservoir from Israeli businessman Aaron Frenkel, The Times of Israel has learned. As part of this visit, SOCAR and its partners are expected to sign a work plan with Israel’s Energy Ministry to advance gas exploration efforts.
While the Energy Ministry declined to comment, SOCAR has yet to respond to requests for clarification.
SOCAR to Lead Offshore Gas Exploration in Israel
SOCAR, which holds a 33.34% stake in the consortium, will act as the designated operator for the gas exploration venture. The exploration license is initially granted for three years, during which time the consortium will conduct exploratory work across the license areas. If at least one well is drilled and further work is completed, the license can be extended by an additional two years, with a maximum extension of seven years.
Strategic Significance of Israel-Azerbaijan Ties
Israel and Azerbaijan share a complex but growing strategic alliance, partly due to Azerbaijan’s proximity to Iran. Despite being a Shiite-majority nation closely allied with Turkey, Azerbaijan has deepened its partnership with Israel, particularly following Israeli support during its conflict with Armenia.
Israel is one of Azerbaijan’s leading arms suppliers, while Azerbaijan provides Israel with substantial oil exports. Both countries have also reportedly engaged in covert cooperation concerning Iran.
SOCAR Expands Global Energy Footprint
SOCAR’s investment in Israel aligns with its broader strategy of acquiring strategic energy assets and expanding exports to Europe via Turkey. The company has been increasing its production footprint in foreign markets as part of this growth initiative.
Israel’s Gas Industry & Export Policy Debate
Since discovering major offshore gas fields more than a decade ago, Israel has transitioned into a gas-exporting nation. The country’s natural gas boom has positioned it for energy independence in a historically resource-scarce region.
The Leviathan field, estimated to hold 22 trillion cubic feet of gas, has attracted major international players, including US energy giant Chevron, to partner with local companies.
In 2020, Israel began exporting natural gas to Egypt from Leviathan. The country also signed a memorandum of understanding with Egypt and the European Union, potentially enabling Israeli gas exports to Europe for the first time.
However, domestic energy demands have fueled debate over gas export policies, with concerns that excessive exports could threaten Israel’s energy security and drive up electricity prices. An inter-ministerial committee on natural gas policy, led by Energy Ministry director-general Yossi Dayan, is set to publish recommendations on export limits in the coming weeks.