Israel's Leviathan gas field secures historic $35B export deal with Egypt

NewMed, a partner in Israel's Leviathan natural gas field, announced Thursday that the field has secured the largest export agreement in the nation's history, a deal valued at up to $35 billion to supply gas to Egypt.

The Leviathan natural gas field, located off Israel's Mediterranean coast and holding an estimated 600 billion cubic meters in reserves, is contracted to supply Egypt with approximately 130 billion cubic meters of gas, according to a Reuters report. 

This supply will continue until 2040 or until the total contracted quantity has been delivered.

The Leviathan natural gas reservoir, a monumental discovery in the Eastern Mediterranean, commenced supplying Egypt shortly after its production began in 2020. 

This significant development marked a new era for regional energy dynamics. 

An initial agreement, forged in 2019, outlined the supply of 60 billion cubic meters (bcm) of natural gas, translating to an average of 4.5 bcm annually. 

Long-term partnership

This substantial volume is projected to be fully delivered to Egypt by the early 2030s, cementing a long-term energy partnership between the two nations. 

The consistent flow of natural gas from Leviathan not only bolsters Egypt's energy security but also positions it as a potential hub for gas re-export to Europe, thereby enhancing its geopolitical standing in the energy sector. 

This strategic collaboration underscores the growing importance of the Leviathan field in meeting regional energy demands and fostering economic cooperation.

Since 2020, the Leviathan natural gas field, the largest in the Mediterranean, has provided Egypt with 23.5 billion cubic meters (bcm) of gas, according to NewMed.

"This is the most strategically important export deal to ever occur in the eastern Mediterranean, and strengthens Egypt’s position as the most significant hub in the region," NewMed CEO Yossi Abu was quoted as saying in the report.

Power crisis

Egypt, as the most populous Arab nation, has faced persistent rolling blackouts for the past two years. 

This ongoing power crisis stems from a combination of strained government finances and a significant shortfall in natural gas supply, unable to meet the country from meeting its electricity demand. 

The economic pressures exacerbate the energy challenges, impacting daily life for millions.

Egypt, rather than becoming a gas supply hub for Europe, has transitioned into a net gas importer.

The country has recently signed agreements with energy firms and trading houses to purchase between 150 and 160 cargoes of liquefied natural gas.

Exports from Leviathan ceased in June for security reasons, amidst a 12-day conflict between Israel and Iran.

On Thursday, a deal was struck for Leviathan to begin supplying Egypt with 20 bcm of gas in early 2026.

This will occur in the first stage, following the connection of additional pipelines.

NewMed announced a second phase of exports, totalling 110 bcm, set to commence after the Leviathan expansion project is completed and a new transmission pipeline is built from Israel to Egypt via Nitzana.

The expansion of Leviathan is projected to enable production and supply within Israel and to neighbouring countries until 2064.