Plans to sell an interest in the largest gas field in the Mediterranean Sea ran afoul of the war in Gaza.
Israel’s NewMed Energy informed the Israeli Securities Authority on March 13 that BP and Adnoc from Abu Dhabi were postponing talks indefinitely over the purchase of a 50% stake in NewMed. The partners had deemed the $2 billion venture to be too risky given the war in Gaza.
In a letter to the ISA as well as the Tel Aviv Stock Exchange, NewMed Energy stated that no date to resume the discussion had been set. The company continued:
“There can be no certainty that discussions will resume or that an agreement will be reached in the future, nor as to the terms of an agreement should one be reached.”
NewMed company shares were down 4.28% at the time of writing. NewMed is a partner with Chevon in developing the Leviathan Reservoir off the coast of Israel. NewMed has a 45.34% stake in the reservoir. The Leviathan Reservoir, with an estimated 22 trillion cubic feet of recoverable gas, is the largest gas reservoir in the Mediterranean, and Chevron holds a 39.66% stake in the reservoir.
Boycotts, maybe
BP is no stranger to controversy, and it is hard to tell which of the three companies led the move to back off from the deal. It is possible that boycotts of companies doing business in Israel or being connected with the war somehow, like the boycotts against Starbucks, McDonald’s, KFC and Pizza Hut, have started to make themselves felt.
Terrorism, perhaps
It could be that the risk of terrorist attacks on the offshore infrastructure was too great. If the groups that support the Palestinians, such as the Houthi, could successfully operate underwater drones to attack shipping, then a target of such magnitude lying offshore and owned in good part by foreigners would be tempting indeed.
And while countermeasures are being developed, they are not perfect. On March 11, the U.S. sank an unmanned underwater vessel posing a threat to ships in the Red Sea, along with 20 anti-ship missiles. The Italian destroyer Caio Duilio also shot down two Houthi drones. With the proliferation of uncrewed air and sea craft carrying explosives, the chance of damage could make the project uninsurable.
