Azerbaijan’s SOCAR set to sign Israel gas exploration agreement

Azerbaijan State Oil Firm (SOCAR) is about to extend its involvement in Israel’s vitality trade. Sources have knowledgeable “Globes” that SOCAR, because the operator in a consortium with British Petroleum (BP) and Yitzhak Tshuva’s NewMed Vitality (TASE: NWMD) to seek for fuel in Block I within the northwest of Israel’s financial waters, will signal a piece plan with Israel’s Ministry of Vitality and Infrastructure in two weeks.

One of many main gamers behind SOCAR’s enlargement of actions in Israel is NewMed Vitality CEO Yossi Abu, whose efforts will bear fruit within the upcoming signing ceremony, which can be attended by a senior Azerbaijan authorities determine.

SOCAR’s newest transfer comes after Israeli businessman Aaron Frenkel’s large deal earlier this 12 months by which he agreed to promote half of his 10% stake within the Tamar fuel subject to the Azerbaijani vitality firm.

Azerbaijan sees the signing of the work program for the I block as a strategic transfer. This can be SOCAR’s first drilling operations outdoors of Azerbaijan. The transfer was purported to have been applied sooner, however was postponed because of the struggle and the following unstable regional safety state of affairs.

In response to the phrases of the tender which was awarded in 2023, the consortium should submit a plan by October 2026 that features drilling in no less than one of many licenses within the block and an extra work plan, which can be accredited by Israel’s Petroleum Commissioner. After executing no less than one drilling and assembly the work plan goals, the businesses will have the ability to lengthen their actions for one more two years.

A big participant for Israel and Turkey

SOCAR’s progress in fuel exploration in Israel’s financial waters has, amongst different issues, dramatic geopolitical implications for the area. SOCAR is a crucial vitality provider for Turkey and Israel. In Turkey, the corporate is the most important international investor, having invested $18.5 billion within the final 17 years, and SOCAR’s subsidiary within the nation employs greater than 10,000 folks.

Azerbaijan can be a big vitality provider for Israel. Oil exports generated a complete income of $14.4 billion for Baku in 2024, with Israel its sixth largest market. Regardless of the Turkish commerce embargo on Israel, the Erdogan administration selected to not halt the provision of Azerbaijani oil to Haifa, though passes by his nation. The explanation: Ankara’s vitality dependence on SOCAR and the necessity to not disrupt relations with Azerbaijan.

Worldwide strengthening of the entrance in opposition to Iran

As well as, relations between Israel and Azerbaijan are very shut. Azerbaijan was the second greatest buyer of Israeli protection industries between 2018 and 2022 (over 9% of all Israeli protection exports). The connection between the international locations can be based mostly on working collectively in opposition to the key risk from Iran, Azerbaijan’s southern neighbor.

Azerbaijan and Iran do keep official diplomatic relations, however the two international locations usually criticize one another publicly – whereas Iran is making an attempt to behave on Azerbaijani territory. Two months in the past, for instance, Azerbaijan revealed that it had thwarted an Iranian try and hurt one of many leaders of the Jewish neighborhood on its territory. In January 2023, an assault was carried out on the Azerbaijani embassy in Tehran. Iran additionally accuses Azerbaijan of permitting, it claims, Israel’s Mossad to function from its territory. All this and different common recriminations between the international locations.

Amid these tensions, final month, the Azerbaijani president’s assistant for worldwide relations, Hikmet Hajiyev, met with Israel’s Prime Minister Benjamin Netanyahu final month within the Azerbaijani embassy in Tel Aviv to reportedly talk about “regional developments.” The principle regional developments the 2 spoke about had been the need to calm and mediate with Turkey on developments in Syria. Only a week later, an affiliate of the Azerbaijani president landed in Ankara, the place he met together with his buddy, the top of the Nationwide Communications Directorate, Fahrettin Altun, one of many politicians closest to Erdogan, with the Azerbaijani embassy in Ankara reporting that the 2 mentioned “regional and world” points.

This isn’t the one geopolitical significance of the define settlement between Azerbaijan and the Israeli Ministry of Vitality. Block I, the place SOCAR will function, is situated on Israel’s maritime borders with Lebanon and Cyprus, whereas Turkey doesn’t acknowledge the boundaries of financial waters as established by worldwide regulation. Slightly, Ankara is the one nation that acknowledges the Turkish Republic of Northern Cyprus (KKTC) and subsequently believes that it deserves financial waters. With the enlargement of Azerbaijani SOCAR’s actions within the area, it is rather tough to see a state of affairs by which the Turks would categorical opposition and attempt to thwart the transfer.

Potential for regional cooperation and the Syrian connection

One other consideration for SOCAR in coming into the fuel exploration consortium with NewMed and BP in Block I is its strategic location for Azerbaijan. Amongst different issues, Azerbaijan seeks to seek out and transport fuel to Mersin in southeastern Turkey and from there to European international locations through a pipeline that already exists and is lively in Turkey itself, thereby strengthening its energy.

As well as, by increasing its vitality actions, Azerbaijan could have bigger regional plans to attach a number of international locations with fuel pipelines. Of the ten.09 BCM produced from the Tamar reservoir in 2024, about 34% was bought to Jordan, amongst others, and of the 11.33 BCM produced from Leviathan about 81.4% was directed for export. The Hashemite Kingdom is crossed from south to north by the Fajr fuel pipeline, which connects to Syria so far as Homs, and from there branches off to Tripoli in Lebanon and Banias in western Syria. A senior vitality trade official advised “Globes” that there’s potential for establishing a undertaking that will join the international locations through fuel pipelines, at a value that would attain $200 million.

Within the vitality trade usually and fuel particularly, this isn’t a big sum, and definitely not unreasonable. Such a undertaking may benefit all events concerned: Israel, which might earn better revenue from fuel and Turkey’s financial dependence on it; Jordan would earn royalties from transport throughout its territory; and Syria, which solely lately handled the autumn of the previous Assad regime and the institution of a brand new regime that’s making an attempt to get nearer to the West, would have the ability to each use the imported fuel to its benefit and rebuild relations with Israel.

Revealed by Globes, Israel enterprise information – en.globes.co.il – on March 7, 2025.

© Copyright of Globes Writer Itonut (1983) Ltd., 2025.