Israeli oil company Delek Drilling has set up a company that will take over a 9.25% stake in the Tamar natural gas field and list on the Tel Aviv Stock Exchange.

Delek must sell its entire 31.25% stake in Tamar, a large offshore field that is Israel's main gas supply, by 2021 under government plans to open the market to competition.

It has not yet announced plans for selling the rest of the stake.

To begin the process, Delek Drilling established Tamar Petroleum, which will buy the 9.25% stake in the field through a $650 million bond offering planned for July, followed by an initial public offering, according to a document filed via the stock exchange.

"After examining several alternatives and in view of the interest of foreign and Israeli investors, we decided to establish a corporation which will allow investors optimal direct exposure to the Tamar reservoir," chief executive Yossi Abu told Reuters.

Texas-based Noble Energy sold off a 3% stake of Tamar last year in a deal valuing the field at $12.3 billion. Using a similar value, Tamar Petroleum could look to raise more than $500 million in its IPO.

JP Morgan and HSBC are handling the public offering in the international market, according to people with knowledge of the plan.

Delek Drilling is a subsidiary of conglomerate Delek Group.