Egypt locked in a long-term energy backstop after Israeli Prime Minister Benjamin Netanyahu signed off overnight on the stalled USD 35 bn natural gas export agreement. The deal will see Chevron and its partners in the Leviathan gas field, NewMed Energy and Ratio Energies, export 130 bcm of gas to Egypt between 2026 and 2040, Netanyahu said in a televised statement overnight (watch, runtime: 5:30). The agreement is the largest in Israel’s history, Netanyahu noted.

Why it matters

The supply agreement will play a critical role in stabilizing Egypt’s natural gas supply, which has struggled to balance rising domestic demand and with a fall in local production supply, thanks in large part to technical challenges with the massive offshore Zohr field. That’s had us importing more and more LNG to keep the lights on and prevent a return to the days of rolling blackouts.

It will also curb our natural gas import bills: The Madbouly government had earlier securedLNG 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.

Why Israel, you may wonder? It’s cheap (so less pressure on our FX reserves) and the infrastructure is already in place (so no time delay to build or rent infrastructure — and no capex or leasing costs). The volume we’ll be importing from Israel could come in as much as USD 28 bn cheaper than had we bought the same volumes on the open market at current prices, Al Arabiya suggests.

And our LNG re-export ambitions will get a shot in the arm, allowing us to use existing liquefaction plants to re-export the gas as LNG to Europe. Liquefying and exporting as much as 60% of the gas we import from Israel could generate c. USD 22 bn in revenue here in Egypt, Al Arabiya reports.

BACKGROUND- Egypt and Israel first inked an agreement in early August that would see flows first increase from 4.5 bn cubic meters in 2025 to 6.5 bn cubic meters as early as 2026. Netanyahy then froze the agreement in September amid rising Israeli-Egyptian tensions over the war in Gaza and Cairo’s military deployments in Sinai. The deadline to obtain an export permit from Israel’s Energy Ministry for the project was later pushed to 31 December.

In other energy news…

Britain exempted our Zohr gas field from Russia sanctions, allowing continued payments linked to the project until October 2027, Reuters reports. Russian oil player Rosneft holds a 30% stake in Zohr alongside BP (10%) and majority-owner Eni. Rosneft was sanctioned by the UK and US in October, part of the fallout from Moscow’s invasion of Ukraine. The British government gave no explanation to the carve-out.

(** Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

Tags: