(Bloomberg) -- A United Arab Emirates sovereign wealth fund plans to buy a stake in an Israeli natural-gas field for as much as $1.1 billion, in what would be one of the first major business deals since the nations normalized ties last year.
Abu Dhabi’s Mubadala Investment Co., a fund with $232 billion of assets, signed a memorandum of understanding to buy Delek Drilling LP’s 22% stake in the Tamar offshore field.
“If finalized, the transaction will be the largest commercial agreement” since the signing of the Abraham Accords, Delek said.
Delek’s shares rose as much as 9.1% on Monday, before paring gains to 3.1% at 12:10 p.m. in Tel Aviv.
Israel and the UAE’s deal in August was a historic breakthrough hailed by leaders including then-U.S. President Donald Trump as a crucial step toward forging peace in the Middle East. The UAE was the first Arab nation after Egypt and Jordan to recognize Israel.
Investment Deals
Israeli Prime Minister Benjamin Netanyahu promised it would lead to billions of dollars of investment in his country. Bahrain, Morocco and Sudan have since then also normalized ties with Israel, following intense diplomacy from Netanyahu and Trump.
The UAE, of which Abu Dhabi is the capital, and Israel have agreed to develop anti-drone systems, artificial intelligence and big data analysis together as bi-lateral ties expand.
There have also been talks between businesses in the two countries on everything from oil pipelines, to soccer to financial payments.
The announcement comes amid a boom in gas investments in the eastern Mediterranean, with Turkey, Israel, Egypt and Cyprus all trying to develop fields.
The Abu Dhabi fund would make the acquisition through its energy arm, Mubadala Petroleum.
The “proposed transaction”’ would “strengthen our gas-biased portfolio in line with our energy transition targets,” Mubadala Petroleum said in a statement.
Tamar is Israel’s biggest field after Leviathan and located around 90 kilometers (56 miles) from the coastal city of Haifa. It supplies gas to Israel, Jordan and Egypt.
Israel is in talks to build a new subsea pipeline to Egypt, which aims to become a major exporter of liquefied natural gas to Europe.
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