Since October 2020 there is a new actor in Israel’s maritime space and economy, predominately the energy sector. This is the result of the commercial merger and acquisition by the Chevron Corporation (NYSE: CVX) of Noble Energy Inc (NASDAQ: NBL) – hereafter referred to as Chevron and Noble. Both are American companies. The transaction was valued at US$13 billion following the approval of the merger by more than 90 percent of Noble shareholders.1 Through the acquisition, Chevron has become a strategic maritime partner and significant economic partner of the State of Israel, Israeli public and private sector companies, citizens as well as the country’s partners in the region, especially Egypt and Cyprus.
How long will Chevron stay in Israel? That is an important question for such a large corporation. Israel has been a pariah for most of the top players in the global energy industry. The world’s major energy companies have had too many interests in the Arab world to risk exploring for natural gas or oil in Israel. Even with the discovery of important reserves of natural gas in Israeli territorial waters, Israel was still too small change to make it worth the trouble. Noble was the only company to seriously invest in the search and drilling operations in the country, often referring to Israel as the holy land because of the large number of holes it had drilled finding nothing until the first offshore discovery in 1999.
The strategic dynamics have changed since September 2020 with the signing of the Abraham Accords. The Gulf countries of the United Arab Emirates (UAE) and Bahrain have warmed to Israel. When Morocco and Sudan followed suit in establishing ties with Israel in 2020 it appeared that the UAE had become a regional leader treading a new path that is more suitable for the 21st century. Three Arab states, two of which were African, followed the UAE’s lead. With this breakthrough, the 20st century anti-Israel sentiments have now been supplanted by Israel partnerships. The wider Eastern Mediterranean is also emerging as a major source of natural gas. Chevron has interests in Saudi Arabia, Kuwait and Iraqi Kurdistan; it must have taken into account the political changes and any risks involved in buying Noble and its Israeli assets and decided that they were manageable.
The rationale for this article’s historical examination of a fixed period of one calendar year is that it has not been an easy year for anyone. At the fore was the military operation in Gaza during which Chevron’s gas platforms were forced to cease operations. That and the COVID-19 virus affecting global gas prices saw a rocky start to the new relationship. There are five additional aspects that are relevant. This article examines each in dedicated sections: financial aspects, regional politics, the UAE and the 10 Abraham Accords, the proposed Eastern Mediterranean natural gas pipeline, security aspects, Chevron and local companies, and scandals and environmental aspects.
The article relies on data from multiple sources including Chevron, the Israeli government, the private sector, the media, and other secondary sources including academia. The analysis of the data weighs the significance of each historically to project the ways forward for a potential win-win outcome in the maritime, strategic and economic partnership of Chevron in Israel. It contributes to the study of Israel’s natural gas sector by documenting the current thinking so that others can build upon it in the future or relate to it in a comparative analysis in subsequent years.
