The government of Egypt has signed a $35 billion gas supply agreement that will allow the delivery of natural gas from Israel’s Leviathan gas field.
It is described as the largest export agreement in Israel’s history.
This development was disclosed by NewMed, one of the partners in the gas field, on Thursday, according to a Reuters news report.
“This is the most strategically important export deal to ever occur in the eastern Mediterranean, and strengthens Egypt’s position as the most significant hub in the region,” NewMed CEO Yossi Abu said.
The deal opens a new phase for deeper energy collaboration between Israel and the most populous Arab country, which has endured rolling blackouts over the last two years.
“This deal, made possible by our strong regional partnerships, will unlock further regional export opportunities, once again proving that natural gas and the wider energy industry can be an anchor for collaboration,” Abu added.
Leviathan gas field
The Leviathan field, located off Israel’s Mediterranean coast, holds about 600 billion cubic metres (bcm) of gas in reserves. It is the largest natural gas field in the Mediterranean region.
Approximately 130 bcm of gas from the field, operated by Chevron, will be sold to Egypt through 2040, or until all contract quantities are fulfilled.
The decade-long contract is expected to boost gas supplies to Egypt. Leviathan first began supplying gas to Egypt shortly after production began in 2020.
The government had signed an initial deal in 2019 to lift 4.5 bcm annually, but that contract is expected to end by the early 2030s.
Recently, gas supplies from the field were disrupted during a crisis between Israel and Iran. During the 12-day conflict in June, exports from Leviathan were halted for security reasons.
However, NewMed says Israel’s Leviathan has so far supplied 23.5 bcm of gas to Egypt since 2020.
The company added that the field will undergo an expansion to support production and supplies within and beyond Israel through 2064.
What this means for Egypt
Leviathan is a critical lifeline for Egypt, whose domestic gas output has declined sharply in recent years amidst mounting pressure on government finances.
Egypt once pursued the ambition of becoming a major gas hub for European countries, but that goal has now been abandoned. It has since become a net importer of gas, mostly from Israel.
The country recently signed several agreements with energy firms and trading houses to buy between 150 to 160 cargoes of liquefied natural gas.
This new agreement between Egypt and Israel is structured in two phases.
In the first phase, Leviathan will begin supplying Egypt with 20 bcm of gas in early 2026 after the connection of additional pipelines.
The second phase will involve the export of the remaining 110 bcm after the Leviathan project is expanded with a new transmission pipeline to Egypt via Nitzana in Israel.
