BP and Abu Dhabi's state oil giant on Tuesday made an offer to acquire 50 per cent of Israeli offshore natural gas producer NewMed Energy for around $4 billion.
The offer would involve acquiring NewMed's free floating shares and taking the company private and would mark Abu Dhabi National Oil Co (ADNOC) and BP's entry into Israel's growing energy sector.
ADNOC and BP said they intend to form a new joint venture as part of the deal that will be "focused on gas development in international areas of mutual interest including the East Mediterranean."
NewMed is the largest stakeholder in the giant Leviathan offshore field, operated by Chevron, which produces 12 billion cubic metres (bcm) of gas that are supplied to Israel, Egypt and Jordan.
The field's partners are planning to further expand its production and are also exploring plans for a liquefied natural gas (LNG) terminal to further boost exports.
The offer is a further sign of the strengthening economic ties between Israel and the United Arab Emirates since the two countries agreed to normalise ties in 2020.
Last year, Abu Dhabi's Mubadala Petroleum acquired from Delek Drilling a 22 per cent stake in the east Mediterranean Tamar gas field for about $1 billion.
For BP, the deal highlights the British company's focus on growing natural gas production after Chief Executive Bernard Looney last month slowed down its shift away from fossil fuels.
The offer price is 12.05 ILS ($3.38) per share, reflecting a 72 per cent premium above the pre-deal market price, to a total of 14.1 billion ILS, or $3.96 billion.
BP shares gained 2 per cent at the open in London on Tuesday.
After the deal closes NewMed will become a private corporation equally held by the BP-ADNOC JV and Delek Group , which holds the remaining 50 per cent.