By: 5 Pillars

On December 17, Israeli Prime Minister Benjamin Netanyahu confirmed that the government had approved a long-term deal to supply natural gas to Egypt from the Leviathan offshore field. The agreement, valued at approximately 112 billion shekels (around $35 billion), covers the export of about 130 billion cubic meters of gas through 2040.

Netanyahu described the deal as the largest in Israel's history, stating it was approved after securing the country's vital security interests and includes a requirement for companies to sell gas domestically at a good price to Israeli citizens.

The contract was originally signed in August by NewMed Energy, Chevron, and other partners in the Leviathan consortium. Operating rights for the field are held by Chevron, NewMed Energy Partnership, and Ratio Oil Exploration, with the Egyptian energy firm Blue Ocean Energy reported as the buyer.

Israeli officials indicated that expanded exports will begin from 2026 after infrastructure upgrades. An initial volume of around 20 billion cubic meters is expected first, with larger deliveries to follow after field expansion is completed. The Israeli government framed the agreement as a major economic milestone that will generate revenue for public spending and solidify Israel's position as a regional energy hub.

The deal builds on existing gas exports to Egypt that began in 2020 and significantly increased by 2023 as Egypt's domestic production declined. The new contract nearly triples previous volumes, addressing Egypt's acute energy shortfall.

Analysts noted the agreement extends beyond economics, creating an "instrumental interdependency" that ties Egypt's energy security to Israeli supply, potentially reducing the likelihood of political confrontation. However, critics argued it could give Israel leverage over Egyptian positions on sensitive regional issues, including Gaza.

The timing of the approval was notable, occurring amidst international pressure on Israel over the war in Gaza and Egypt's key mediating role. Reports indicated the approval was delayed earlier in the year, causing frustration in Washington and leading to speculation that Egypt might seek alternative supplies from Qatar. In September, Israeli media reported that Netanyahu had personally ordered the deal not to proceed without his approval, citing disputes over military deployments in Sinai.

While supporters argue the cheaper energy will help stabilize Egypt's economy, some Egyptian voices have privately expressed concern that overreliance on Israeli gas could limit political autonomy. Egypt has not issued an expansive public endorsement of the announcement.