Leviathan partners seal $35-billion gas export deal with Egypt

The partners in Israel’s Leviathan offshore gas field have signed the largest export agreement in the country’s history, worth up to $35 billion, to supply natural gas to Egypt.

NewMed Energy, one of the partners in the field, reported the deal on Aug. 7.  

The deal is expected to ease an energy crisis in Egypt, which has spent billions of dollars on importing liquefied natural gas (LNG) since its own supplies fell short of demand.

Egypt’s production began declining in 2022, forcing it to abandon its ambitions of becoming a regional supply hub. It has increasingly turned to Israel to make up the shortfall. 

Under the terms of the deal, the Leviathan partners will sell about 130 Bcm of gas to Egypt through 2040, or until all of the contract quantities are fulfilled. The Leviathan Field is estimated to contain some 600 billion cubic meters of gas. 

Leviathan in a first stage will supply Egypt with 20 Bcm of gas starting in early 2026 after the connection of additional pipelines.

It will export the remaining 110 Bcm in a second phase that will begin after completion of the Leviathan expansion project and the construction of a new transmission pipeline from Israel to Egypt via Nitzana in Israel, NewMed said.

The initial volumes could lower Egypt’s LNG imports by roughly 1-2 Bcm in 2026 and reduce the strain on global LNG markets, analysts have said. 

Israeli gas reportedly accounts for about 15-20% of Egypt’s gas demand. Egypt has been struggling to increase its gas production in recent years. 

The Leviathan Field began supplying the Egyptian market shortly after production began in 2020. The field, operated by Chevron, also supplies Jordan.

Leviathan’s expansion, which would cost around $2.4 billion, should allow for production and supply to Israel and its neighbors through 2064, NewMed said.