The global energy landscape is shifting - and not just because of decarbonization or the rise of renewables. Traditional energy players are evolving, forging new partnerships, and asserting their influence in strategic regions. One of the most striking recent developments is Azerbaijan’s entry into offshore gas exploration in Israeli waters - a move that could reshape both bilateral ties and the regional energy architecture.
During a recent high-level visit to Israel, Azerbaijani Economy Minister Mikayil Jabbarov oversaw the signing of a landmark memorandum of understanding between the State Oil Company of the Republic of Azerbaijan (SOCAR) and Israel’s Union Energy. While memorandums are often symbolic, this one quickly translated into action: SOCAR was granted its first-ever license to explore for gas outside of Azerbaijan. The location? Israel’s Exclusive Economic Zone, within a promising area known as Cluster I.
Spanning approximately 1,700 square kilometers in the northern portion of Israel’s territorial waters, Cluster I is considered one of the most attractive new exploration sites in the Eastern Mediterranean. The license, awarded to a consortium comprising SOCAR, BP, and Israel’s NewMed Energy, marks not only a technical milestone but a strategic breakthrough for both Baku and Tel Aviv.
This development is emblematic of how energy diplomacy can drive broader geopolitical realignment. Azerbaijan is no stranger to international energy cooperation - it has long exported oil and gas through pipelines connecting the Caspian region to Europe and beyond. But its foray into the Mediterranean gas market, and specifically into Israel’s tightly controlled offshore space, is a powerful signal: Azerbaijan is now stepping confidently into global upstream ventures.
The implications go beyond energy. SOCAR’s growing international footprint speaks to Azerbaijan’s broader economic ambitions. For Israel, partnering with a state-owned energy company with decades of technical expertise offers immediate benefits - particularly as the country seeks to further develop its Leviathan and Tamar gas fields and position itself as a hub for regional energy exports.
But trust is the true currency in this deal. This agreement follows months of high-level diplomatic activity.
Hikmat Hajiyev, Assistant to the President of Azerbaijan - Head of the Foreign Policy Department of the Presidential Administration, visited Israel twice - in December 2023 and February 2024 - holding talks with President Isaac Herzog and Prime Minister Benjamin Netanyahu. Minister Jabbarov’s own visit to Israel in March included meetings with top Israeli officials across a range of portfolios: energy, economy, finance, foreign affairs, and innovation.
This isn’t just about natural resources; it’s about a shared vision for future cooperation. Azerbaijan brings deep experience in exploration and production, while Israel offers cutting-edge technology and a dynamic innovation ecosystem. When these strengths are aligned, the result is a powerful partnership capable of shaping not just markets but strategic outcomes.
Energy relations between the two countries are not new. Azerbaijan has been one of Israel’s top oil suppliers for over a decade. In 2024, Israel ranked sixth among the largest buyers of Azerbaijani crude, importing over $713 million worth of oil. What’s new is the scale, scope, and strategic depth of the cooperation. Moving from crude oil trade to gas exploration and asset acquisition signals a maturation of bilateral ties.
In fact, the partnership has already deepened further. In early 2025, SOCAR finalized a separate agreement with Union Energy to acquire a 10% stake in Israel’s Tamar gas field - one of the most vital energy assets in the Eastern Mediterranean. Operated by Chevron, Tamar plays a critical role in regional gas supply, including exports to Egypt and Jordan. SOCAR’s entry into Tamar marks Azerbaijan’s first major energy investment in the Mediterranean and its most significant step yet toward becoming a global upstream player.
This move is especially important given the geopolitical challenges surrounding energy in the region. The final contract for Cluster I exploration was delayed due to the outbreak of the Israel-Hamas conflict in October 2023. Despite these tensions, the agreement moved forward - a testament to both sides' determination to pursue long-term strategic goals over short-term instability.
According to the terms of the license, the SOCAR-led consortium has until October 2026 to present a detailed development plan. This must include at least one drilling operation, as well as a comprehensive work program to be approved by Israel’s Commissioner for Oil Affairs. The license is initially valid for three years, with the possibility of extensions.
More broadly, Azerbaijan’s presence in the Eastern Mediterranean contributes to regional energy diversification - a top priority for both European and Middle Eastern countries. As the world scrambles to secure reliable and politically stable energy sources, Azerbaijan is positioning itself as a bridge - not only between East and West, but between traditional hydrocarbons and modern energy governance.
The strategic significance of this move cannot be overstated. Azerbaijan is no longer just a supplier - it is now a stakeholder in shaping the future of energy in one of the world’s most complex and dynamic regions. This deepening partnership with Israel reflects Baku’s clear-eyed understanding of regional geopolitics and its desire to play a proactive role in promoting energy security, innovation, and economic integration.
In a world where energy alliances increasingly mirror geopolitical fault lines, the Azerbaijan-Israel partnership offers something rare: a pragmatic, forward-looking model of cooperation grounded in mutual benefit, strategic clarity, and long-term vision.
