Norway wealth fund selling Delek stake over ethical breach

Yitzhak Tshuva  / Photo: Gidon Levin
Yitzhak Tshuva / Photo: Gidon Levin

The sovereign wealth fund is selling its Delek stake because its NewMed Energy unit's energy exploration deal with Morocco is in waters disputed with Western Sahara.

The Norwegian sovereign wealth fund is selling its stake in Israeli energy company Delek Group Ltd. (TASE:DLEKG) following a recommendation from its ethics committee. The fund had a 3% holding in Delek, controlled by Yitzhak Tshuva, at the end of 2022, worth about $60 million.

The fund's ethics committee is concerned about the agreement Delek unit NewMed Energy (TASE: NWMD) signed with Morocco in December 2022 to develop offshore gas fields in waters that are claimed by Western Sahara.

In the past the Norwegian fund has divested from Israeli companies active over the green line in Judea and Samaria for similar ethical reasons.

The Norwegian fund said that NewMed Energy had signed the agreement with the Moroccan government even though "The Moroccan government does not have legal and sovereign rights for the rich natural resources in the region."

Morocco conquered the region and annexed it in the late 1970s and only a few countries including the US and Israel recognize the legitimacy of the annexation. For most other countries sovereignty is disputed. The Polisario Front holds large swathes of Western Sahara and demand control of the entire region.

The Norwegian fund wrote, "This is a serious violation of the basic ethical norms of the wealth fund because the activities are not consistent with the interests and wishes of the people of Western Sahara and contributes to maintaining the area's unresolved situation."

Under the terms of the agreement announced in December 2022 NewMed Energy and Adarco Energy will each hold 37.5% stakes in the Boujdour Atlantique offshore license with the Moroccan government's National Office of Hydrocarbons and Mines retaining the other 25%. The exploration license is valid for eight years.

The Norwegian fund decided to divest from Delek in May buit the decision is only being made public now. It is unclear whether the fund has already sold its stake or will do so gradually in the future.

Delek Group has so far not responded to the report.

Published by Globes, Israel business news - en.globes.co.il - on December 20, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Yitzhak Tshuva  / Photo: Gidon Levin
Yitzhak Tshuva / Photo: Gidon Levin
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