Chevron and its Israeli Leviathan partners NewMed Energy and Ratio Energies will send 130 bn cubic metres (bcm) of gas to Egypt from 2026 through 2040, under an inked amendment to their existing 2019 gas export agreement with Egypt’s Blue Ocean Energy, according to a release (pdf) from NewMed on Thursday. The agreement is expected to bring in some USD 35 bn worth of gas over the 15-year period.

Flows will first increase from 4.5 bn cubic metres in 2025 to 6.5 bn cubic metres as early as 2026 under the first 20 bn cubic meter phase of the agreement, according to the Israeli energy company’s 2Q financial results presentation (pdf). Increased flows will follow the under-construction Ashdod-Ashkelon pipeline being connected to Egypt to enable the larger quantities.

Following this, supplies will increase again to 11.5 bn cubic meters in 2029 under the second 110 cubic meter phase of the agreement, then rise again to 12.5 bn cubic metres a year in 2033 before settling to 12.0 cubic meters a year from 2036 onwards. This increase of exported gas is contingent on a final investment decision due 30 September — with the option to extend by six months — by Chevron and its partners to expand the field’s capacity and for operator Israel Natural Gas Lines to decide on capacity allocations for the planned Nitzana pipeline to Egypt.

The agreement puts the price of the piped gas considerably below the current market rates for LNG, with gas offtake from Blue Ocean Energy priced at around USD 7.60 per mn British thermal units (BTU), according to calculations by industry publication Middle East Economic Survey (Mees). Despite being up from the previous unamended offtake agreement, this is nearly half of the USD 12-13 per mn BTU that the state is currently paying for LNG imports to bridge the supply gap.

REMEMBER- Rising demand at home and a fall in domestic supply has pushed Egypt to increasingly rely on LNG imports to keep the lights on and prevent a return to the days of planned outages. The Madbouly government has secured LNG supply through 2026 at a total estimated cost of USD 8 bn after signing agreements with six international energy companies, a government source in the energy sector previously told EnterpriseAM.

The increased gas flows won’t only help close the supply gap, but also help us realize LNG re-export ambitions, a senior source at the Oil Ministry told EnterpriseAM. Egypt will be able to become a regional energy hub by using its liquefaction plants to re-export the gas as LNG to Europe using the planned increase in Israeli imports and the planned imports of Cypriot gas, they added.

But Israeli imports aren’t without risk, with imports prone to sudden halts on the back of Israeli military action in the region leading to the shutdown of exports several times this year, which led to the cutting of supplies to key energy-intensive industries. Public outrage over Israel’s assault on Gaza and rising diplomatic tensions between Cairo and Tel Aviv also lend themselves to an uneasy partnership.

The big-ticket agreement also caught the attention of the international business press, including the Financial Times, Bloomberg, and Reuters.

ALSO- The Egyptian General Petroleum Corporation has cancelled seven mazut shipments amounting to some 2.2 mn barrels, which had been scheduled to arrive this month, Asharq Business reports, citing unnamed sources. The shipments that were secured in June after Israel briefly halted supplies during its war with Iran were then later cancelled due to the country having bridged its supply gap with LNG contracts and the resumption of Israeli gas imports.

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