Egypt will increase its contracted imports of natural gas from Israel’s Leviathan field under a new deal beginning next year, further deepening the nation’s reliance on imports of the fuel long term.
The agreement is an indication of Egypt’s desperation for gas due to rise in domestic demand and declining output from its own fields. Although the long-term contract is cheaper than the prices of natural gas deal of $35 billion obtainable in the short-term global market, it questions Egypt’s desire to resume its role as a fuel exporter.
Leviathan operators signed an agreement to send 130 billion cubic meters of gas to Egypt between 2026 and 2040, Israel’s NewMed Energy LP, a partner in the project stated. The value of the export contract is approximately $35 billion, making it Israel’s biggest ever, it said.
Egypt became a net importer of gas in 2024 and has been importing huge amounts of liquefied natural gas since, making deals for deliveries through 2028. The added Israeli flows could allow Cairo to import fewer LNGs in the future than it otherwise would have had to.
The gas field currently has a deal to send approximately 4.5 billion cubic meters a year to Egypt, which will increase in stages beginning next year and potentially as much as 12.5 billion cubic meters a year by 2033. Egypt also bought 2.5 billion cubic meters in the short-term market last year, a volume that can vary from one year to the next.
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.”
Although Leviathan’s gas is more economical, the interruption of flows from Israel to Egypt due to the war with Iran in June threatened potential weaknesses in the supply chain. The disruption compelled Cairo to suspend supplies to certain industries such as fertilizer producers.
According to the new agreement, a natural gas deal of $35 billion 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 initial phase of the agreement, which will come into effect next year, 20 billion cubic meters of gas will be delivered to Egypt. The second phase, with a capacity of about 110 billion cubic meters, involves the completion of the Leviathan expansion project and development of a new pipeline from Israel to Egypt through Nitzana.
NewMed’s shares increased up to 6.4% in Tel Aviv, the largest intraday climb since Feb 4. NewMed owns a 45.34% interest in Leviathan together with Chevron Corp. with 39.66% and Ratio Energies LP with 15%.
