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(Bloomberg) — Egypt will boost its purchases of natural gas from Israel’s Leviathan field almost threefold under a new agreement starting next year, deepening the country’s dependence on imports of the fuel for the long haul.
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Leviathan’s operators signed an agreement to send 130 billion cubic meters of gas to Egypt from 2026 to 2040, Israel’s NewMed Energy LP, which is a partner in the project, said in a statement on Thursday. The export deal is worth about $35 billion, making it the largest in Israel’s history, it said.
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Shares of NewMed rose as much as 6.4% in Tel Aviv, the steepest intraday gain since Feb 4.
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The gas field already sends around 4.5 billion cubic meters a year to Egypt, which will rise in stages starting next year and could reach as much as 12.5 billion cubic meters a year by 2033. The deal is underpinned by projects to expand Leviathan’s production, which NewMed said in on track for final investment decision now that a supply agreement’s in place with Egypt, and construct a new pipeline.
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The decision to ramp up purchases from Leviathan reflects Egypt’s desperate need for gas due to surging domestic demand and declining production from its own fields. The country has been doing deals for large volumes of liquefied natural gas, turning it into a net importer in 2024 after several years as an exporter.
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Read: Egypt Plans More LNG Deals, Driving Global Competition for Fuel
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Importing LNG has also raised Egypt’s overall costs because the super-chilled fuel costs more than twice as much as pipeline gas from Israel.
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While Leviathan’s gas is cheaper, the interruption of flows from Israel to Egypt because of the war with Iran in June highlighted possible vulnerabilities in the supply route. The disruption forced Cairo to halt supplies to some industries including fertilizer producers.
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Under the new agreement, gas will be delivered to buyer Blue Ocean Energy over 14 years with payments determined by a formula based on the price of Brent crude oil.
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During the first phase of the deal, set to take effect next year, 20 billion cubic meters of gas will be delivered to Egypt. The second phase, totaling around 110 billion cubic meters, requires completion of the Leviathan expansion project and the construction of a new pipeline from Israel to Egypt via Nitzana.
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NewMed holds a 45.34% stake in Leviathan alongside Chevron Corp. with 39.66% and Ratio Energies LP with 15%.
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—With assistance from Omar Tamo, Galit Altstein and Paul Jarvis.
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(Updates throughout with details.)
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English (US)