Adnoc, BP suspend $2 bln Israel gas deal as war in Gaza rages

BP Plc and the United Arab Emirate’s state energy firm suspended a $2 billion bid to buy a major stake in Israel’s NewMed Energy, as the war in Gaza roils the wider region.

The suspension in talks was the result of “uncertainty created in the external environment,” according to a statement from NewMed.

Despite the pause, the Israeli company said BP and the Abu Dhabi National Oil Co. “again expressed interest in the proposed transaction.”

Shares of NewMed fell as much as 8 percent in Tel Aviv.

The deal was announced in March last year, highlighting the burgeoning financial ties between the UAE and Israel since the normalization of diplomatic relations. At the time, the countries said the political accord would lead to billions of dollars of investment.

But negotiations between NewMed, BP, and Adnoc were thrown off course by Hamas’s October 7 attack on Israel, which upended the region’s politics and strained ties with Arab states as Tel Aviv launched an assault on Gaza.

Israel’s military operations have angered most of the Arab world, including the UAE. Abu Dhabi has consistently criticized Prime Minister Benjamin Netanyahu’s government for the devastation in the Palestinian enclave and the rising death toll among civilians.

The incursion by Hamas, considered a terrorist organization by the US and European Union, killed 1,200 people in southern Israel.

Israel’s retaliatory air and ground assault on Gaza has killed around 31,000, according to the Hamas-run health ministry.

The UAE and Israel only formally recognized each other in 2020 through the US-brokered Abraham Accords. The UAE has said it won’t back out of that deal, even as it pushes Israel to stop fighting and allow more aid into Gaza.

The deal would have extended BP’s presence in the eastern Mediterranean while marking Adnoc’s first foray into the region. The two companies continue to work on other projects together, having last month said they would form a joint venture in Egypt focusing on natural gas.

Adnoc has is also pressing ahead with its own plans to build a global natural gas business. On Tuesday it said it would make final investment decision on a liquefied natural gas export plant this year. The UAE is expanding its gas output to become self-sufficient in the fuel by the end of the decade.