Azerbaijan’s SOCAR to buy Tamar stake from Aaron Frenkel

Azerbaijan State Oil Company (SOCAR) has agreed to buy a 10% stake in Israeli offshore gas field Tamar from Aaron Frenkel, a source close to the matter has told “Globes.” This represents over half of the stake in Tamar held by Frenkel and another major deal for the Israel businessman.

Frenkel’s 20% stake in Tamar includes 14.5% held directly and the remainder as part of a 25% stake in Tamar Petroleum (TASE: TMRP), which holds 16.75% of the gas field. The sale of Tamar shares by Frenkel follows his sale last month of a 2% stake in Bank Leumi (TASE: LUMI) for an estimated gain of more than NIS 600 million.

State-owned SOCAR manages Azerbaijan’s oil and gas industry and the investment in Israel has major geopolitical implications and brings Israel and Azerbaijan even closer together diplomatically.

SOCAR’s investment in the Tamar gas field, operated by energy major Chevron, has, as far as is known, received the US company’s blessing. Therefore, it is also part of President Trump’s policy of strengthening economic stability in the Middle East through strategic investments, especially in the energy sector. Chevron not only owns a 25% stake in Tamar, but is also its operator for all the partners. This investment by SOCAR promotes economic ties between the US, Azerbaijan, and Israel, and will help leverage strategic cooperation in a variety of fields.

Frenkel built his direct position in the gas field through an option transaction with Mubadala Petroleum, owned by the Abu Dhabi government, which he exercised in December 2022, as well as from Harel Insurance and Finance and the Israel Infrastructure Fund (at the end of last September). He also bought 25% of the shares of Tamar Petroleum, which controls 16.75% of the field. Together with his purchase of Tamar Petroleum shares, Frenkel has invested NIS 3.4 billion in the Tamar gas field, mainly through bank financing.

Frenkel is estimated to have made a profit of about NIS 2 billion on his investment in Tamar. The estimates are based, among other things, on the deal he himself recently made in which he paid approximately NIS 280 million (over NIS 1 billion) for 3.5% of the rights in the reservoir he purchased from the Israel Infrastructure Fund, which gave the reservoir a value of over NIS 8 billion NIS 28 billion at the time of the deal). This value is almost double the value of the reservoir in the 2021 deal, in which Delek Drilling (now NewMed Energy) sold 22% of the rights to Mubadala for NIS 1.1 billion, based on a value of about $5 billion for the Tamar reservoir (NIS 15.8 billion).

Frenkel himself recently told “Globes” about the investment in Tamar. He said, “This is an investment that was created as part of the response to the Abraham Accords. I entered into it as a result of the good relations I have in Abu Dhabi and the UAE. We sat there with senior people at the top who said: How do we turn the signed paper (the Abraham Accords) into something concrete? We knew that Yitzhak Tshuva (controlling owner of Delek Drilling) was obliged to sell the holdings in the Tamar reservoir by December 2022. So they (Mubadala) bought and gave me an option, but I was the one who initiated the matter.”

Mubadala acquired 22% of Tamar and gave Frankel an option to sell him half of its holdings in the reservoir (11%). He went on to acquire another 3.5% stake, while at the same time acquiring about 24.99% of Tamar Petroleum, which owns 16.75% of Tamar. “I have a direct and indirect stake of about 18.7% of Tamar,” he said, “and since I am one of the controlling shareholders of Tamar Petroleum, you could say that I influence 31.25% of the reservoir.”

The Tamar reservoir, located in the Mediterranean Sea 90 kilometers west of Haifa, was discovered in 2009 and production began in early 2013. The reservoir’s current production capacity is 10.3 BCM per year and its gas reserves are estimated at 291.5 BCM. The partners in the reservoir today, alongside Frankel and Tamar Petroleum, are Mubadala, Isramco, Chevron and Dor Gas.

Published by Globes, Israel business news – en.globes.co.il – on February 1, 2025.

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