Israel’s Leviathan signs $35 billion natural gas supply deal with Egypt.
Israel and Egypt have signed a 25-year natural gas supply deal worth 35 billion that would see gas output from the offshore Leviathan field delivered by pipeline to Egyptian customers, totalling 130 billion cubic metres (bcm) by 2040 at an average assumed price of 7.75 per million British thermal units (mmBtu). Deal should ease energy crisis in Egypt. Israeli pipeline gas should be much cheaper than imported liquefied natural gas (LNG).
Egypt has been having trouble making enough gas for itself. It has been spending a lot of money buying LNG from other countries. This new deal will help Egypt by giving it more gas from Israel. The gas from Israel is cheaper to get than buying it from other places.
Leviathan is one of the largest natural gas fields in Israel. It has a lot of gas, about 600 bcm. Leviathan reservoir began supplying Egypt shortly after production began in 2020. The field, operated by Chevron, which also holds a 40% stake, also supplies Jordan.
The deal, which was announced by Israeli energy company NewMed, will see 130 bcm worth of gas piped from the Leviathan offshore field to Egypt through to 2040. NewMed is one of three co-owners of the field, along with Israeli company Ratio and Chevron. It holds 45.34 percent of the gas reservoir. Leviathan’s expansion, which would cost around $2.4 billion, should allow for production and supplies within Israel and to its neighbours through 2064, NewMed said.
This is a significant expansion of an existing deal struck between Egypt and Israel in 2018, which has seen 4.5 bcm worth of gas delivered to Egypt annually. New deal with Israel will help Egypt have more gas and might reduce the need to buy gas from other countries. But it also means that Egypt will become more dependent on Israel for its gas. Exports from Leviathan were halted during a 12-day war between Israel and Iran in June for security reasons, but have since resumed.
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.
Analysts estimate the average cost of LNG at $13.5 per mmBtu million British thermal units (mmBtu), compared to $7.75 for Israeli gas. That excludes the cost of leasing floating storage (FSRUs), Reuters reported.
Cairo steps up imports to address growing domestic demand amid a collapse in its own gas production over the last three years. Egypt’s gaping energy gaps over the previous two summers have seen rolling blackouts amid soaring temperatures, sparking public anger. The government has tried to plug the gap by boosting its LNG imports, which are projected to soar to $19bn this year, up from $12bn in 2024.
/NewMed, Reuters/