Israeli companies tout big plans to develop renewable energy projects in MENA
August 17, 2022
NewMed (formerly Delek Drilling), developer of Leviathan and Tamar gas fields, and Enlight Energy to make push for green energy generation in region, including Saudi Arabia, Oman
Israeli energy companies Enlight Energy and NewMed Energy, formerly Delek Drilling (part of Yitzhak Tshuva’s Delek Group), announced a plan this week to jointly develop, bankroll, build, and manage renewable energy projects across the Middle East and North Africa, including in countries with which Israel does not have formal diplomatic ties.
The companies said their partnership will aim to push into the renewable energy markets in Morocco, the United Arab Emirates, and Bahrain — signatories to the US-brokered Abraham Accords — as well as oil giant Saudi Arabia and Oman, with which Israel is said to maintain warm covert relations. Also on the list were neighboring countries Egypt and Jordan, with which Israel has longstanding peace agreements and natural gas export agreements. In June, Israel signed a new deal with Cairo and the European Union to export natural gas to the bloc via Egypt.
Enlight and NewMed said they plan to work on projects related to solar energy, wind energy, and energy storage projects in these countries and explore new opportunities in the region.
Enlight specializes in developing and financing renewable energy projects such as solar and wind facilities that generate green energy worldwide, with ongoing projects in Israel, the US, Sweden, Spain, Serbia, Hungary, and Croatia. The company was founded in 2008 and is listed on the Tel Aviv Stock Exchange.
Delek Drilling, alongside various partners, led the discovery and development of Israel’s Leviathan, Tamar, Karish, and Tanin natural gas fields off the Mediterranean coast. Under a controversial natural gas framework agreement in 2015, the Israeli government required Delek to sell its holdings in Tamar, Karish, and Tanin to break its monopoly and that of its partners.
The company sold all its stakes in Karish and Tanin in 2016 to London-headquartered Greek company Energean and, last year, finalized the sale of its 22% stake in Tamar to Abu Dhabi’s Mubadala Petroleum, a unit of the government-owned Mubadala Investment Company, for about $1 billion.
Delek Drilling CEO Yossi Abu said at the time that the deal was a “pivotal brick to the wall of friendship and collaboration” the company has been building in the Mideast region.
Post-sale, Delek Drilling owns a 45.3% stake in Leviathan, which contains an estimated 22 trillion cubic feet of gas. As part of Delek Group, whose controlling shareholder cuts a controversial figure in Israel, Delek Drilling reported net profits for 2021 of $405 million, assets totaling over $385 million, and royalties to the state of $128 million.
Israel had set up a sovereign wealth fund following the discovery of natural gas back in the late 2000s to invest the expected energy windfall — for the state; not quite for consumers who continue to pay high electricity prices — as well as proceeds from the extraction of other natural resources, such as minerals and stone.
Israel’s natural gas operations have put the country on a path to energy independence — and have shielded it from the worst of the energy crisis sparked by the Russian war on Ukraine this year — in a region with few natural resources. Saudi Arabia is an exception, as the largest exporter of crude oil in the world and the country with the second-largest proved reserves, with 15% of all global reserves.
Israel’s most recent target is to generate 40 percent of its electricity from renewable sources, mainly solar energy, by 2030.
A new, contentious climate deal accepted in November by almost 200 countries calls for an eventual end of some coal power and of fossil fuel subsidies.
Rebrand and pivot
In February, Delek Drilling re-branded as NewMed Energy, announcing the expansion of Leviathan, a move to explore new markets, and the entry into the fields of alternative energy (such as hydrogen and carbon capture) and renewable energy. NewMed said at the time that it was in advanced talks with Morocco to secure exploration licenses in the North African kingdom.
Abu said he was excited about the new company’s deal with Enlight, adding, “Just as we have brought the gas revolution to the countries of the region, so we will strive to bring the renewable energy revolution.”
The NewMed CEO is personally part of the joint agreement, signing on as a third party to the deal. His inclusion “recognizes his unique experience and vast network of relationships he has forged in recent years across the region as CEO of NewMed Energy,” the company said.
Enlight will be the controlling shareholder during both the construction phase and operational phase of the new partnership, and will own 70% together with Abu (who, in turn, owns a 30% stake in the partnership with Enlight).
Enlight CEO Gilad Yavetz said regional events in recent years have led to “the emergence of an unprecedented opportunity, which started with natural gas and which will extend into the renewable energy sector.”
“Our partnership has the unique potential of delivering large-scale renewable energy operations across the region,” said Yavetz in a company announcement.
The companies plan to use local partners to advance and implement any projects, they said.