Israel inks $35 bln deal to export 130 bcm of natural gas to Egypt until 2040 - Economy

Al-Ahram Weekly

9 hours ago

Israeli NewMed Energy has signed a landmark deal to export 130 billion cubic metres (bcm), or 4.59 trillion cubic feet (tcf), of natural gas, worth around $35 billion, to Egypt until 2040.
The new deal, signed with Blue Ocean Energy (BOE) — which buys natural gas from the Leviathan reservoir for Egypt — marks the largest export deal in Israel's history and the most significant agreement since the discovery of natural gas reservoirs in the country.
Under the terms of the new deal, the export of gas to Egypt is expected to continue until 2040 or until all contract quantities are fulfilled, a NewMed press release said.
The Leviathan reservoir began exporting natural gas to Egypt shortly after commencing production in January 2020.
To date, it has provided around 23.5 bcm of natural gas to the Egyptian market, with a contracted annual volume of 4.5 bcm (0.16 tcf) through Blue Ocean Energy, alongside spot quantities sold on an interruptible basis.
The original export agreement with Egypt, signed in 2019, is set to conclude once the total contracted quantity of approximately 60 bcm is sold, which is projected to occur in the early 2030s.
The new agreement will replace this existing contract and is divided into two stages.
Stage one involves the sale of 0.7 tcf (approximately 20 bcm) of gas. This stage is expected to take effect in the first half of 2026, following the completion of two key projects designed to enhance the production and transportation capacity:
1. The connection of a third pipeline from the Leviathan reservoir to the production platform, increasing gas production to over 0.5 tcf (approximately 14 bcm) per year;
2. The enhancement of the Ashdod-Ashkelon transmission pipeline, currently being carried out by INGL, which will increase the natural gas transmission capacity in the EMG pipeline by an additional 0.07 tcf.
Once the first stage comes into effect, it will allow the sale of 0.7 tcf of gas to Egypt annually.
Stage two involves an additional 110 bcm (3.88 tcf) of gas. This stage will commence after the completion of the Leviathan expansion project and the construction of a new transmission pipeline from Israel to Egypt via Nitzana.
This Leviathan expansion project will significantly boost the annual natural gas production capacity in Israel by approximately 30 percent, bringing it to around 21 bcm (0.74 tcf).
The new pipeline via Nitzana will help accommodate increased export capacities from Israel to Egypt.
The total gas exports for stage two will amount to approximately 110 bcm (3.88 tcf) in varying annual quantities, which will raise the total sales from Leviathan to Egypt to an annual quantity of around 0.42 tcf (approximately 12 bcm).
Thus, the overall export of approximately 130 bcm (4.59 tcf) of natural gas, based on a pricing formula primarily linked to Brent crude oil prices, is projected to generate around $35 billion in revenue for all partners involved in the reservoir.
The finalization of this deal will facilitate a final investment decision for the Leviathan expansion project.
In February, the Leviathan said it plans to increase annual production capacity to approximately 21 bcm, with potential future expansions.
The expansion plan includes drilling additional wells, enhancing subsea systems, expanding processing facilities on the platform, and potentially laying a fourth pipeline between the reservoir and the production platform.
Leviathan is the largest natural gas field in the Mediterranean Sea and one of the largest in the world. According to the latest prospective resources report, the Leviathan reservoir contains approximately 600 bcm (21.2 tcf), and production is expected to continue until at least 2064, according to discounted cash flow projections.
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