In a dramatic turn of events, BP Plc and the United Arab Emirates’ (UAE) state oil firm ADNOC have suspended their ambitious $2 billion bid to acquire a major stake in Israel’s NewMed Energy. The deal, which was initially announced in March last year, has been put on hold due to the ongoing conflict in the region.
The suspension of talks comes as the war in Gaza continues to escalate, impacting politics across the Middle East. According to a statement from NewMed, the decision was driven by the “uncertainty created in the external environment.” Despite the pause, both BP and Abu Dhabi National Oil Co. (ADNOC) have expressed continued interest in the proposed transaction.
NewMed Energy, an Israeli company, had hoped that the deal would strengthen financial ties between the UAE and Israel following the normalization of diplomatic relations. At the time of the initial announcement, both countries anticipated that the political accord would lead to substantial investments.
However, negotiations hit a roadblock when Hamas launched an attack on Israel on October 7, disrupting the delicate balance in the region. The assault on Gaza strained ties with Arab states, including the UAE, which has consistently criticized Israeli Prime Minister Benjamin Netanyahu’s government for the devastation in the Palestinian enclave and the rising civilian death toll.
Israel’s retaliatory actions have further angered the Arab world, with the UAE expressing its disapproval. Despite these challenges, the UAE and Israel formally recognized each other in 2020 through the US-brokered Abraham Accords. The UAE remains committed to the deal, even as it urges Israel to cease hostilities and allow more aid into Gaza.
Shares of NewMed fell by as much as 8% on the Tel Aviv stock exchange following the announcement of the suspension. The fate of the gas deal now hangs in the balance, with geopolitical tensions overshadowing economic interests.
As the war rages on, the future of energy cooperation between these nations remains uncertain. The once-promising gas deal now faces an uphill battle, caught in the crossfire of regional conflicts and political complexities.