Israel’s Delek Drilling plans gas deal with UAE’s Mubadala Petroleum

JERUSALEM - One of Israel's biggest energy companies plans to sell its share of a large offshore gas field to a firm based in the United Arab Emirates for an estimated $1.1 billion, the biggest such deal since the two countries normalized ties last year.

Delek Drilling, owned by the Israeli billionaire Yitzhak Tshuva, said Monday that it signed a memorandum of understanding with Mubadala Petroleum, part of a conglomerate owned by the government of Abu Dhabi. The proposed deal was detailed in a notification filed with Israeli authorities.

Delek Drilling is required to sell its 22% share of the offshore Tamar gas field by the end of this year as part of a 2015 gas framework agreement aimed at introducing more competition to the Israeli gas sector, which has grown in recent years with the discovery of large offshore reserves.

The Tamar field, which went online in 2013, is believed to hold more than 300 billion cubic meters of gas. Chevron and the Israeli-American company Isramco each own around a third of Tamar, with the remainder held by smaller firms.

Israel and the United Arab Emirates agreed to normalize relations last year in a US-brokered deal. Since then, Israelis have flocked to the UAE, home to the bustling futuristic cities of Dubai and Abu Dhabi, and companies have pursued partnerships in a wide range of sectors.

The normalization agreement, which was followed by similar accords with Bahrain, Sudan and Morocco, eroded the long-standing Arab consensus that recognition of Israel should only be granted in return for advancing the peace process with the Palestinians.