Houston-based energy company joins Israeli partner in offshore gas exploration

Israel’s Energy Ministry announced Monday that it had awarded six offshore natural gas exploration licenses to Houston-based Murphy Oil and Israeli company Ratio Energies, with each partner holding a 50% stake.

The licenses cover approximately 1,700 square kilometers of seabed, located about 25 kilometers (about 16 miles) southwest of the massive Leviathan natural gas field.

The agreement marks Murphy Oil’s entry into the Eastern Mediterranean energy market, as Israel seeks to expand its offshore natural gas production despite ongoing regional security concerns and the risk of renewed conflict with Iran.

It also comes as European countries look to diversify their energy supplies amid Russia’s ongoing war against Ukraine and disruptions to key shipping routes.

The exploration area, known as Zone G, was previously offered to Italian energy company Eni in October 2023. However, following the outbreak of the Swords of Iron War after Hamas’ Oct. 7 massacre, Eni delayed moving forward with the project before eventually withdrawing its bid, opening the door for other companies to pursue the licenses.

Israel’s existing offshore gas production has faced repeated disruptions during the past three years. Production at the Leviathan and Tamar fields has been temporarily suspended during periods of heightened regional conflict, including Iranian ballistic missile attacks and Houthi attacks launched from Yemen.

Nevertheless, strong international demand for natural gas, particularly in Europe, has continued to attract energy companies interested in Israel’s existing production capacity and the potential for future discoveries.

Israel currently has a $35 billion, multi-year agreement to supply natural gas to Egypt’s Idku and Damietta liquefaction facilities on the Mediterranean coast. After being processed at these facilities, much of the gas is exported to European markets, creating an increasingly important economic and strategic relationship between Israel, Egypt and the European Union.

These energy connections have taken on added significance amid disruptions to shipping through the Strait of Hormuz, the Bab el-Mandeb Strait and the Suez Canal during the war with Iran, as well as restrictions on Russian energy exports amid Moscow’s ongoing war against Ukraine.