BP plc BP, the UK-based energy major, and Azerbaijan’s SOCAR have entered Israel’s offshore gas sector through a joint licensing agreement with NewMed Energy, the Israeli Energy Ministry announced on Monday. The deal grants exploration rights in Zone I of Israel’s Exclusive Economic Zone, marking BP’s first venture in Israel and SOCAR’s first exploration project outside Azerbaijan.

The three-party consortium, consisting of BP, SOCAR and NewMed Energy, secured the rights to Zone I after winning a competitive bid in Israel’s 4th Offshore Bid Round in 2023. The round offered exploration opportunities in four designated zones — E, G, H, and I — covering 20 blocks in total. SOCAR will serve as the operator of Zone I, holding a 33.34% stake, with BP and NewMed Energy each holding 33.33%.

The Israeli government views this agreement as a key move to strengthen domestic gas production and expand exports. Officials highlight natural gas as a crucial asset for the country's economic and political standing. Additional exploration licenses are expected to be awarded later this year, with the fifth bidding round planned for 2025.

SOCAR has been actively increasing its footprint in Israel’s offshore gas industry. Earlier this year, it acquired a 10% stake in the Tamar gas field, one of the Mediterranean’s most critical energy assets. The company views its involvement in Israel’s offshore sector as a key part of its upstream expansion strategy in the region.

With major gas discoveries like Tamar and Leviathan already in production, Israel has emerged as a significant gas supplier in the Eastern Mediterranean. BP and SOCAR’s entry into the country’s exploration efforts aligns with Israel’s push to expand its gas production and strengthen its role in regional energy markets.

BP’s Zacks Rank & Key Picks

BP currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like Archrock Inc. AROC, NextDecade Corporation NEXT and Oceaneering International, Inc. OII. While Archrock presently sports a Zacks Rank #1 (Strong Buy), NextDecade and Oceaneering each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

NextDecade is an emerging player in the LNG space with its Rio Grande LNG project in Texas. As demand for LNG continues to grow, the company’s strategic investments in infrastructure and planned liquefaction capacity provide strong upside potential. With the global LNG market expanding, NEXT is well-positioned to tap into the increasing export demand from the United States.

Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. With a geographically diverse asset portfolio and a balanced revenue mix between domestic and international operations, the company effectively mitigates risk. As a leading provider of offshore equipment and technology solutions to the energy sector, OII benefits from strong relationships with top-tier customers, ensuring revenue visibility and business stability.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BP p.l.c. (BP) : Free Stock Analysis Report

Oceaneering International, Inc. (OII) : Free Stock Analysis Report

Archrock, Inc. (AROC) : Free Stock Analysis Report

NextDecade Corporation (NEXT) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research