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BP and UAE suspend $2 billion gas deal in Israel as Gaza war drags on

London CNN  —  BP and an oil company owned by the United Arab Emirates have shelved talks to buy a 50% stake in Israel’s leading natural gas producer, judging the $2 billion deal too risky as the war in Gaza rages. NewMed Energy said Wednesday that all three companies had agreed to “suspend discussions” on the deal “due to the uncertainty created by the external environment.” BP (BP) and Abu Dhabi’s state oil company Adnoc had “reiterated… interest in the proposed transaction,” it added in a statement, without detailing the conditions under which talks might resume. “There can be no certainty that discussions will resume or that an agreement will be reached in the future, nor as to the terms of an agreement should one be reached,” NewMed Energy said. BP declined to comment beyond confirming the content of the NewMed statement. Adnoc declined to comment. NewMed Energy’s shares fell as much as 7% in Tel Aviv. The development highlights the impact the war in Gaza is having on companies doing business in the Middle East. Several Western brands, including Starbucks, McDonald’s, KFC and Pizza Hut, have faced boycotts in the region by customers who perceive them as supporting or having ties to Israel’s war in Gaza. A picture taken on June 10, 2017, shows a Seattle-based Starbucks Coffee shop at the Avenue Mall in Kuwait City. / AFP PHOTO / Yasser Al-Zayyat (Photo credit should read YASSER AL-ZAYYAT/AFP via Getty Images) Yasser Al-Zayyat/AFP/Getty Images Related article Starbucks is laying off thousands of workers in the Middle East in response to Gaza boycotts BP announced the proposed investment in NewMed Energy just under a year ago as part of a plan to form a joint venture with Adnoc to extract natural gas in “areas of mutual interest,” including in the eastern Mediterranean. The proposed transaction was widely seen as evidence of deepening financial ties between Israel and the UAE following the normalization of diplomatic relations in 2020. But the war has strained those ties, and the UAE has repeatedly called for an “immediate ceasefire” in Gaza. In the days immediately following the October 7 Hamas attacks on Israel, which triggered the war, a BP executive told investors that the company remained “optimistic” about the prospects for the NewMed deal, according to Reuters. BP and Adnoc were to acquire 50% of NewMed Energy by buying the company’s publicly traded shares, plus part of a stake held by Delek, an Israeli energy conglomerate. NewMed owns 45.34% of the Leviathan Reservoir, the largest gas reservoir in the Mediterranean and the location of one of the world’s biggest deepwater gas discoveries. Chevron holds a 39.66% stake in the reservoir. Separately, BP was one of six companies awarded licenses by Israel’s energy ministry in October to explore for natural gas off the country’s Mediterranean cost. The British oil company and Adnoc continue to work on other projects together. Last month, they announced a joint venture to develop natural gas assets in Egypt.