Azerbaijan State Oil Company (SOCAR) is set to increase its involvement in Israel's energy industry. Sources have informed Globes that SOCAR, as the operator in a consortium with British Petroleum (BP) and Yitzhak Tshuva's NewMed Energy to search for gas in Block I in the northwest of Israel's economic waters, will sign a work plan with Israel's Energy and Infrastructure Ministry in two weeks.
One of the major players behind SOCAR's expansion of activities in Israel is NewMed Energy CEO Yossi Abu, whose efforts will bear fruit in the upcoming signing ceremony, which will be attended by a senior Azerbaijan government figure.
SOCAR's latest move comes after Israeli businessman Aaron Frenkel's huge deal earlier this year in which he agreed to sell half of his 10% stake in the Tamar gas field to the Azerbaijani energy company.
Azerbaijan sees the signing of the work program for the I block as a strategic move. This will be SOCAR's first drilling operation outside of Azerbaijan. The move was supposed to have been implemented sooner, but was postponed due to the war and the ensuing unstable regional security situation.
According to the terms of the tender which was awarded in 2023, the consortium must submit a plan by October 2026 that includes drilling in at least one of the licenses in the block and an additional work plan, which will be approved by Israel's Petroleum Commissioner. After executing at least one drilling and meeting the work plan aims, the companies will be able to extend their activities for another two years.
A significant player for Israel and Turkey
SOCAR's progress in gas exploration in Israel's economic waters has, among other things, dramatic geopolitical implications for the region. SOCAR is an important energy supplier for Turkey and Israel. In Turkey, the company is the largest foreign investor, having invested $18.5 billion in the last 17 years, and SOCAR's subsidiary in the country employs more than 10,000 people.
Azerbaijan is also a significant energy supplier for Israel. Oil exports generated a total revenue of $14.4 billion for Baku in 2024, with Israel its sixth largest market. Despite the Turkish trade embargo on Israel, the Erdogan administration chose not to halt the supply of Azerbaijani oil to Haifa, even though passes through his country. The reason: Ankara's energy dependence on SOCAR and the need not to disrupt relations with Azerbaijan.
International strengthening of the front against Iran
In addition, relations between Israel and Azerbaijan are very close. Azerbaijan was the second biggest customer of Israeli defense industries between 2018 and 2022 (over 9% of all Israeli defense exports). The relationship between the countries is also based on working together against the major threat from Iran, Azerbaijan's southern neighbor.
Azerbaijan and Iran do maintain official diplomatic relations, but the two countries often criticize each other publicly — while Iran is trying to act on Azerbaijani territory. Two months ago, for example, Azerbaijan revealed that it had thwarted an Iranian attempt to harm one of the leaders of the Jewish community on its territory. In January 2023, an attack was carried out on the Azerbaijani embassy in Tehran. Iran also accuses Azerbaijan of allowing, it claims, Israel's Mossad to operate from its territory. All this and other regular recriminations between the countries.
Amid these tensions, last month, the Azerbaijani president's assistant for international relations, Hikmet Hajiyev, met with Israel's Prime Minister Benjamin Netanyahu last month in the Azerbaijani embassy in Tel Aviv to reportedly discuss "regional developments."
The main regional developments the two spoke about were the desire to calm and mediate with Turkey on developments in Syria. Just a week later, an associate of the Azerbaijani president landed in Ankara, where he met with his friend, the head of the National Communications Directorate, Fahrettin Altun, one of the politicians closest to Erdogan, with the Azerbaijani embassy in Ankara reporting that the two discussed "regional and global" issues.
This is not the only geopolitical significance of the outline agreement between Azerbaijan and the Israeli Ministry of Energy. Block I, where SOCAR will operate, is located on Israel's maritime borders with Lebanon and Cyprus, while Turkey does not recognize the boundaries of economic waters as established by international law.
Rather, Ankara is the only country that recognizes the Turkish Republic of Northern Cyprus (KKTC) and therefore believes that it deserves economic waters. With the expansion of Azerbaijani SOCAR's activities in the region, it is very difficult to see a situation in which the Turks would express opposition and try to thwart the move.
Potential for regional cooperation and the Syrian connection
Another consideration for SOCAR in entering the gas exploration consortium with NewMed and BP in Block I is its strategic location for Azerbaijan. Among other things, Azerbaijan seeks to find and transport gas to Mersin in southeastern Turkey and from there to European countries via a pipeline that already exists and is active in Turkey itself, thereby strengthening its power.
In addition, by expanding its energy activities, Azerbaijan may have larger regional plans to connect several countries with gas pipelines. Of the 10.09 BCM produced from the Tamar reservoir in 2024, about 34% was sold to Jordan, among others, and of the 11.33 BCM produced from Leviathan about 81.4% was directed for export.
The Hashemite Kingdom is crossed from south to north by the Fajr gas pipeline, which connects to Syria as far as Homs, and from there branches off to Tripoli in Lebanon and Banias in western Syria. A senior energy industry official told "Globes" that there is potential for establishing a project that would connect the countries via gas pipelines, at a cost that could reach $200 million.
In the energy industry in general and gas in particular, this is not a large sum, and certainly not unreasonable. Such a project could benefit all parties involved: Israel, which would earn greater income from gas and Turkey's economic dependence on it; Jordan would earn royalties from transport across its territory; and Syria, which only recently dealt with the fall of the old Assad regime and the establishment of a new regime that is trying to get closer to the West, would be able to both use the imported gas to its advantage and rebuild relations with Israel.