Azerbaijan’s SOCAR set to sign Israel gas exploration agreement

The Azerbaijan State Petroleum Company (SOCAR) plans to increase its involvement in Israel’s energy industry. Sources are telling the “Grove” that SOCAR will search for gas in Block I, Israel’s economic zone, as an operator of a consortium with British oil (BP) and Yitzhak Tshuva’s new energy (Tase:NWMD) to search for gas in Block I, in the northwest of Israel’s economic zone.

One of the key players behind the expansion of SOCAR’s activities in Israel is new energy CEO Yossi Abu, whose efforts will pay off at future signing ceremonies.

SOCAR’s latest move comes after Israeli businessman Aaron Frenkel agreed to sell half of his 10% stake in the Tamar gas field to the Azerbaijani Energy Company earlier this year.

Azerbaijan is seen as a strategic move to sign the I-Block work programme. This will be SOCAR’s first excavation work outside of Azerbaijan. The move should have been implemented earlier, but was postponed due to the war and subsequent security situation in the unstable regions.

According to the bid terms awarded in 2023, the consortium must submit a plan by October 2026 that includes drilling at least one license within the block and an additional work plan approved by Israeli petroleum commissioners. After performing at least one drill and meeting the objectives of the work plan, the company can extend its activities for another two years.

Key players in Israel and Türkiye

SOCAR’s advances in gas exploration in Israel’s economic zones have, among other things, dramatic geopolitical implications for the region. SOCAR is an important energy supplier for Türkiye and Israel. In Turkey, the company is the largest foreign investor, investing $18.5 billion over the past 17 years, with domestic SOCAR subsidiary employing more than 10,000 people.

Azerbaijan is also an important energy supplier in Israel. Petroleum exports generated Baku’s total revenue of $14.4 billion in 2024, with Israel being the sixth largest market. Despite Turkish trade embargo on Israel, the Erdogan government chose not to halt Azerbaijan’s oil supply to Haifa, despite passing through his country. Reason: There is no need to confuse Ankara’s energy dependence and relationship with Azerbaijan.

International strengthening of the front against Iran

Furthermore, the relationship between Israel and Azerbaijan is very close. Azerbaijan was the second largest customer in the Israeli defense industry from 2018 to 2022 (over 9% of all Israeli defense exports). The relations between the countries are also based on cooperation against major threats from Iran, Azerbaijan’s southern neighbour.

Although Azerbaijan and Iran maintain official diplomatic relations, both countries often publicly criticize each other – Iran is trying to act on Azerbaijan’s territory. For example, two months ago, Azerbaijan revealed that it had hampered an Iranian attempt to hurt one of the leaders of the Jewish community on its territory. In January 2023, an attack took place at the Embassy of Azerbaijan in Tehran. Iran also claims that Azerbaijan is allowing Israeli Mossad to operate from its territory. All of this and other regular new nations.

Amidst these tensions, last month Hikumet Hadjiev, an assistant international relations to President Azerbaijan, reported that he would discuss “regional development” at Israeli Prime Minister Benjamin Netanyahu and Tel Aviv’s embassy of Azerbaijan. Their main regional developments were their desire to calmly mediate Turkey on Syrian development. Just a week later, a fellow Azerbaijani president landed in Ankara, where he was one of Farrettin Altun, the closest director of the National Communications Bureau to Erdogan, and reported on the “regional and global” issues along with the two of them discussed the Azerbaijani Embassy in Ankara.

This is not the only geopolitical significance of the overview agreement between Azerbaijan and the Israeli Ministry of Energy. Block I, operated by SOCAR, is located at Israel’s maritime boundary between Lebanon and Cyprus, but Turkey does not recognize the boundaries of economic zones established by international law. Rather, Ankara is the only country that recognizes the Northern Cyprus (KKTC) Turkey Republic and therefore considers it to be economic zone. With the expansion of Azerbaijan SOCAR’s activities in the region, it is extremely difficult to see the situation where Turks express their opposition and try to stop the movement.

Possibility of regional cooperation and Syria’s connections

Another consideration for SOCAR when entering the gas exploration consortium with Block I’s NewMed and BP is the strategic location of Azerbaijan. Above all, Azerbaijan is trying to find and transport gas in Mersin, southeastern Turkey. It is transported to European countries through pipelines already present and active in Türkiye itself, thereby strengthening its power.

Furthermore, by expanding its energy activities, Azerbaijan may develop a larger regional plan to link several countries with gas pipelines. Of the 10.09 bcm produced from the Tamar Reservoir in 2024, about 34% were sold to Jordan, and about 81.4% of the 11.33 bcm produced from Leviathan was ordered to export. The Kingdom of Hashemite crosses south with the Fajrga Pipeline. The Fajrga pipeline connects to Syria and Hom, from which branches step on the branches in Tripoli, Lebanon and Banias, western Syria. Senior energy industry officials told “Globes” that it could establish a project connecting the country via gas pipelines.

In the energy industry in general, and gas in particular, this is not a huge amount and certainly not unreasonable. Such projects could benefit all involved parties. Israel will earn greater income from gas and gain Türkiye’s economic dependence. Jordan earns royalties from transport across territory. And, recently dealing with the collapse of the old Assad regime and the establishment of a new regime that is about to move towards the west, Syria will be able to use imported gas to its advantage and restructure its ties with Israel.

Published by Globes, Israel Business News – En.Globes.co.il – March 7, 2025.

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