Israel Signs Deal to Give Azerbaijani State Oil Company Gas Exploration Rights

Latest Developments

• Azerbaijan’s State Oil Company Will Oversee Exploration Activities: Israel has awarded Azerbaijan’s state oil company, SOCAR, gas exploration rights in Israel’s exclusive economic zone in the Mediterranean Sea following the signing of an agreement on March 17. SOCAR will act as the operator and oversee a consortium responsible for exploration activities of the more than 650 square-mile area. The consortium will include BP and Israel’s NewMed Energy, with each member holding approximately one-third of the rights.
• Strengthening Israel’s Geopolitical Standing: Azerbaijani Economy Minister Mikayil Jabbarov and SOCAR President Rovshan Najaf traveled to Israel to sign the deal with Israeli Energy and Infrastructure Minister Eli Cohen. Cohen called the agreement a “historic milestone,” adding, “Natural gas is a strategic asset that strengthens our economic and geopolitical standing worldwide, especially in the Middle East.” Jabbarov, whose visit marks the first for an Azerbaijani minister since the start of the Israel-Hamas war in 2023, also met with Israeli President Isaac Herzog, Economy Minister Nir Barkat, and Foreign Minister Gideon Sa’ar. Azerbaijan became the first Shiite majority nation to open an embassy in Israel in March 2023.  
• Europe Sees Alternative to Russian Gas: The consortium was originally awarded exploration rights for the area in October 2023, but the Israel-Hamas war delayed the signing of the contract. In February, SOCAR bought a 10 percent stake in Israel’s Tamar gas field. Since Russia’s  invasion of Ukraine in 2022, Europe has sought alternatives to Russian natural gas and has looked to Azerbaijan to increase gas exports to Europe through the Trans Adriatic Pipeline.

FDD Expert Response

“Azerbaijan and Israel are close strategic partners. Tehran is very sensitive to the cooperation between Israel and Azerbaijan, especially since ethnic Azerbaijanis comprise a third of the population of Iran. Azerbaijan-Israel cooperation generates significant soft power for Israel among Iran’s ethnic Azerbaijani population. Azerbaijan is Israel’s top oil supplier, and in 2024, it provided Israel with 60 percent of its oil. When oil ports in Ashdod and Haifa were closed in October 2023, SOCAR sent a lifesaving oil shipment to Israel’s southern oil port in Eilat.” — Brenda Shaffer, Senior Advisor for Energy

“Israelis often joke that out of all the places God chose to give to the Jewish people, he picked the only place in the Middle East without oil. But new natural gas discoveries within Israel’s exclusive economic zone have given Israel the ability to meet its own energy needs and be an exporter, too. Partly due to the large Azerbaijani diaspora in Israel, Azerbaijan’s historically decent treatment of Jews, and longstanding economic and military partnerships, Israel’s relationship with one of the world’s oldest petrostates can position it to play a role in world energy markets as Europe and the Middle East struggle to wean themselves from Russian and Iranian gas exports.” — Dmitriy Shapiro, Research Analyst and Editor

FDD Background and Analysis

“Iran reestablishes its presence in the Caucuses with Armenian arms deal,” by Janatan Sayeh

“Israel’s Role in the Second Armenia-Azerbaijan War and Its Implications for the Future,” by Brenda Shaffer

“Israel Opens First Permanent Embassy in Turkmenistan,” FDD Flash Brief