Egypt Locks In Gas-Import Dependency With New Israel Deal
The deal reflects Egypt's desperate need for gas due to surging domestic demand and declining output from its own fields. While the multiyear contract offers lower prices than those available on the short-term global market, it calls into question the North African country's aspiration to return to being an exporter of the fuel.
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.
The gas field already has a contract to send 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. Egypt also purchased 2.5 billion cubic meters last year on the short-term market, a volume that can vary from one year to the next.
Egypt became a net gas importer in 2024 and has since been buying up large volumes of liquefied natural gas, doing deals for supplies out to 2028. The additional Israeli flows may mean Cairo can import less LNG in the future than it would otherwise have had to do.
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.
'This is a win-win for both sides. It means tremendous savings to the Egyptian market vis-a-vis LNG imports — it's 50% down on the current LNG import market,' NewMed CEO Yossi Abu said in an interview. 'It provides security of energy supply for many, many years to come to feed the growth of the Egyptian economy.'
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.
Read: Egypt Plans More LNG Deals, Driving Global Competition for Fuel
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.
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.
Shares of NewMed rose as much as 6.4% in Tel Aviv, the steepest intraday gain since Feb 4. NewMed holds a 45.34% stake in Leviathan alongside Chevron Corp. with 39.66% and Ratio Energies LP with 15%.
--With assistance from Omar Tamo, Galit Altstein and Paul Jarvis.
(Updates with CEO comment in seventh paragraph.)
More stories like this are available on bloomberg.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
Business Standard
19 minutes ago
- Business Standard
Crude oil prices fall ahead of Trump-Putin meeting at Alaska summit
Oil prices declined on Friday as traders awaited talks between U.S. President Donald Trump and Russian leader Vladimir Putin, which some say could lead to an easing of the sanctions imposed on Moscow over the war in Ukraine. Brent crude futures were down 89 cents, or 1.3 per cent, at $65.95 a barrel by 1315 GMT. U.S. West Texas Intermediate crude futures were 97 cents, or 1.5 per cent, lower at $62.99. At Friday's meeting between Trump and Putin in Alaska, a ceasefire in Ukraine is at the top of the agenda. Trump has said he believes Russia is prepared to end the war, but he has also threatened to impose secondary sanctions on countries that buy Moscow's oil if there is no progress with peace talks. "The market is watching out for whether there is a ceasefire or not. An expectation of a ceasefire translates into more Russian production," said UBS commodities analyst Giovanni Staunovo. "The question is will there be escalation or de-escalation?" For the week, WTI is set to drop 0.7 per cent while Brent is on track for a 0.4 per cent gain. Weaker economic data from China, meanwhile, raised concerns over fuel demand. Chinese government data showed factory output growth slumped to an eight-month low and retail sales growth expanded at its slowest pace since December, weighing on sentiment despite stronger oil throughput in the world's second-largest crude user. Throughput at Chinese refineries rose 8.9 per cent year on year in July, but that was down from June levels, which were the highest since September 2023. Despite the increase, China's oil product exports last month were also up from a year ago, suggesting lower domestic fuel demand. Forecasts of a growing oil market surplus also weighed on sentiment, as did the prospect of higher-for-longer U.S. interest rates. Bank of America analysts said on Thursday that they were widening their forecast for the oil market surplus, citing growing supplies from the OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries, Russia and other allies. The analysts now project an average surplus of 890,000 barrels per day from July 2025 through June 2026. That forecast follows this week's International Energy Agency predictions saying the oil market looks "bloated" after the latest increases to OPEC+ output. (Reporting by Anna HirtensteinAdditional reporting by Laila Kearney and Colleen HoweEditing by Joe Bavier, David Goodman and Jan Harvey)
Mint
19 minutes ago
- Mint
Intel shares extend rally on Trump investment report, stock jumps 4%
Shares of Intel jumped on Friday after a report claimed that the Donald Trump administration is mulling a stake purchase in the US chipmaking company that has been facing struggles in the recent time. A Bloomberg report, which came shortly after US President Donald Trump met Intel CEO Lip-Bu Tan, said that the US government would pay for the development of Intel's factory in Ohio. Investors cheered on the news and the stock price hit a high of as much as 8.9 per cent on Thursday before closing 7.4% higher at the end of trading at $23.86. The Intel shares continued their upward movement on hopes of more financial aid for the turnaround of the struggling chipmaker, rising 4 per cent on Friday. The Ohio plant of Intel has faced setbacks, with the opening of the factory delayed to 2030. The US government investment in Intel is also expected to shore up the chipmaker's finances, which has been down to a point where the company has started layoffs as part of its cost-cutting efforts. The White House however did not confirm the authenticity of the report. 'Discussion about hypothetical deals should be regarded as speculation unless officially announced by the administration,' said White House spokesperson Kush Desai. The report comes as Trump indicated that he would announce tariffs on semiconductors next week. Donald Trump, who called the meeting "very interesting", has taken an unprecedented approach to interventions and deal-making with corporate America. His administration had struck a deal with MP Materials that would make the Department of Defense the largest shareholder of the rare-earth producer. Federal backing could give Intel more time to revive its loss-making foundry business, analysts said, but it still faces a weak product roadmap and trouble attracting customers for new factories. Under the Biden administration, Intel had emerged as one of the biggest beneficiaries of the 2022 CHIPS Act, as former CEO Pat Gelsinger laid out plans to build advanced factories. Tan, however, pared back such ambitions, slowing construction of new plants in Ohio. He plans to build factories based on demand for the services, which analysts have said could put him at odds with Trump's push to shore up American manufacturing.
Mint
3 hours ago
- Mint
Higher Rates Widen Options for Distressed Players, Mudrick Says
(Bloomberg) -- Since 2009, when Jason Mudrick set up his fund Mudrick Capital Management, the world of distressed debt investing has seen three major changes: private equity plays a larger role in the economy, low rates have encouraged highly leveraged capital structures across sectors and there's weaker financial documentation. Traditionally, distressed debt opportunities have emerged when the economy wobbles or specific industries face challenges. But the hike in interest rates in 2022 following a boom in leveraged buyouts stressed companies across sectors, as a majority of firms did not correctly hedge rate risk, Mudrick said on Bloomberg Intelligence's Credit Edge podcast. 'The beauty of this is it impacts all borrowers, not one industry,' said Mudrick, the chief investment officer of Mudrick Capital. 'So we have a very diverse opportunity set, which is very unique to this cycle.' The rush of LBOs came with weak debt documentation, which have allowed companies to move around assets and to pit creditors against each other in an effort to raise more liquidity or reorganize their capital structure outside of bankruptcy court, a maneuver known as a liability management exercise. These type of transactions have elongated the distressed cycle, according to Mudrick, as they often involve distressed debt exchanges, which ratings firms consider a default. That then pushes other investors to sell their holdings. Previously, 'the success or non-success of your investment would ultimately determine on whether you got the valuation right,' said Mudrick. 'Today it's more complicated. You have to value the business, you have to understand the capital structure today, but you also have to understand how that structure may evolve.' The conditions that determine whether a restructuring will give creditors equal treatment or not has also changed. 'We used to think it was really driven by the sponsor. Some sponsors were more aggressive, others were known as being more friendly,' said Mudrick. 'That's not the case anymore. It's so normal to do non-pro rata transactions that I think almost every sponsor out there will consider them.' As an example, Mudrick mentioned Tropicana, which is majority owned by PAI Partners. The private equity firm has a reputation of being a friendly sponsor and yet did a non-pro rata restructuring earlier this year, he said. On the other hand, Cision has done a consensual deal, though it's owned by Platinum Equity, which historically has had a very aggressive reputation in the space, he said. 'You have to evaluate what does the company need, how important is the discount capture, and how important are other things like liquidity needs or maturity extension,' according to Mudrick. Once a company has gone through a liability management exercise, it's unlikely that it conducts a second one, he said. Creditors often times rework covenants as part of the negotiations, which can limit potential options for the company if it struggles again. That makes the post-LME opportunity 'particularly compelling,' Mudrick said. Click here to listen to the full conversation with Jason Mudrick at Mudrick Capital Management. More stories like this are available on
