Israel’s NewMed Energy record record $35 billion natural gas export deal with Egypt

Israel’s NewMed Energy announced Tuesday that partners in the Leviathan reservoir – including Chevron and Ratio Energies – have signed a historic $35 billion deal to supply natural gas to Egypt. The deal, the largest natural gas export agreement in Israel’s history, is expected to strengthen the country’s position as a significant international energy supplier.

“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 Energy CEO Yossi Abu said.

“This deal, made possible by our strong regional partnerships, will unlock further regional export opportunities, once again proving that natural gas and the wider energy industry can be an anchor for collaboration,” he continued.

NewMed, previously known as Delek Drilling, owns 45.3% of the Leviathan gas field off the coast of Israel. The company is part of the Delek Group, which is owned by Israeli business magnate Yitzhak Tshuva.

The company said the gas field partners have agreed to export 130 billion cubic meters (bcm) of natural gas to Egypt by 2040, or until the agreed quantities have been delivered.

Although the energy companies are privately owned, the major deal with the Egyptian government is expected to generate hundreds of millions of shekels in royalties and tax revenues for the State of Israel.

The deal also benefited stockholders – Delek Group stocks increased by 3.5% while Ratio’s stock increased by more than 5%.

Israel has been an energy importer for much of its modern history. However, in 1999, the first gas field was discovered off Israel’s Mediterranean coast. More discoveries followed and the discovery of the Leviathan field in 2010 eventually transformed Israel into a net energy exporter.

Following Russia’s invasion of Ukraine in 2022, the European Union decided to reduce its reliance on energy imports from Russia. Israel was viewed in this context as a potential alternative energy supplier to the European nations.

Despite European interest in Israeli gas fields, a senior U.S. diplomat said in April 2022 that Israel’s EastMed pipeline to Europe was “too expensive” and “not viable.”

In May, the president of Cyprus, Nikos Christodoulides, met with Israeli Prime Minister Benjamin Netanyahu, calling for renewed negotiations within the framework of creating an energy corridor linking Europe and India through the Middle East.