2 days ago
Israel's Energy Influence Expands Even During Gaza War
Nearly two years after the Hamas massacre of October 7, 2023, and the resulting Gaza war that has further isolated Israel diplomatically, the Jewish State announced the largest export deal in its history.
NewMed Energy, in connection with Leviathan Partners, announced that it had signed a $35 billion deal to export natural gas from Israel's offshore Leviathan natural gas field to Egypt. The off taker will be Blue Ocean Energy, who will import that gas into Egypt until approximately 2040.
The transaction, which will involve the drilling of new wells and the connection of new pipelines to Egypt, deepens the ties between the two nations that border Gaza at a time of extreme stress between them. In fact, the Gaza war has infuriated many in Egypt, but Egypt has so far refused to accept any Gaza refugees or allow more aid to flow from Egypt into Gaza.
Regardless of the feelings of many Egyptians, its ruler, General Al-Sisi, understands that his country needs energy. The cheapest and easiest place to find it is in the Leviathan Field. As a result, political considerations like the future of Gaza give way to the everyday needs of the Egyptian people, who struggle to advance, if not simply survive, without a reliable energy supply.
The deal involves the sale of approximately 130 bcm of natural gas to Egypt over the next 15 years, which is approximately equal to two years of supply for the Arab nation. To accomplish this, NewMed will increase its sale of gas to Egypt from 4.5 bcm to 6.5 bcm later this year or early next year, a move that will save Egypt an enormous amount of money.
A political aspect of the deal is that it shows the centrality of energy in the Middle Eastern region, something of which Lebanon is sure to take note. In 2022, Israel and Lebanon reached an agreement on developing the offshore Karish gas field in Israeli waters and the adjacent Qana gas field in Lebanese waters. While Hezbollah has threatened to torpedo that deal and some Israelis have discussed terminating it as well due to Hezbollah's shelling of northern Israel following October 7, the agreement remains. Now, as Lebanese President Joseph Aoun has been openly discussing disarming Hezbollah, natural gas remains available to Lebanon on which to rebuild its shattered economy.
To summarize, despite massive political support in the West, the Palestinians remain extremely isolated in their home region. Egypt's move further amplifies how mere rhetorical support for the Gazans only goes so far. As much as Israeli military pressure may eventually wear down Hamas, it may ultimately be Arab economic needs that finally force Hamas to reevaluate its position of seeming to be willing to "fight to the bitter end,' no matter the cost.
