Israel and Egypt Forge Historic $35 Billion Gas Export Deal

In a significant development for the East Mediterranean energy landscape, Israel’s Leviathan Partnership has secured a landmark export agreement with Egypt valued at $35 billion. This deal, established between NewMed Energy and Egypt’s Blue Ocean Energy, commits to delivering an estimated 130 billion cubic meters (BCM) of natural gas from the offshore Leviathan field until 2040. This transaction stands as the largest of its kind in Israel’s history, reflecting a substantial upgrade to a previous agreement made in 2020.

The agreement will unfold in two phases. Phase One plans to increase deliveries by 20 BCM starting in 2026, contingent upon necessary infrastructure enhancements. These upgrades include the construction of a third pipeline from the Leviathan production platform and completion of the Ashdod-Ashkelon transmission line. Following these improvements, the export capacity will exceed 14 BCM annually, allowing for 2 BCM to flow to Egypt via the EMG pipeline.

Phase Two of the agreement is dependent on the final approval of the Leviathan Expansion Project (Phase 1B) and the establishment of a new export route through Nitzana. Once operational, total production is expected to rise to 21 BCM per year, with up to 12 BCM allocated specifically for Egypt. This increase represents a 30% boost in capacity over current levels.

Pricing for this gas will be linked to Brent crude benchmarks, although final regulatory export approvals and investment decisions are still pending. According to NewMed, as reported by the Times of Israel, the Leviathan field retains over 600 BCM in reserves, sufficient to support production through 2064.

Recent operational interruptions at Leviathan were caused by military actions in the region. Production resumed in mid-2025 after a two-week halt due to Israeli airstrikes on Iranian nuclear facilities during escalating regional tensions. Following a ceasefire brokered by former U.S. President Donald Trump, Israel’s Energy Ministry granted Cheron the authority to restart operations.

During the production outage, both Jordan and Egypt, critical buyers of Israeli gas, faced challenges in replacing lost volumes, contributing to a surge in European gas prices due to broader supply concerns. Yossi Abu, CEO of NewMed, described the deal as “a tool for strategic reality change,” while Yitzhak Tshuva, owner of the Delek Group, emphasized that it “strengthens regional cooperation and promotes stability.”

Looking ahead, the Israeli Energy Ministry estimates that total future exports from Leviathan could reach 145 BCM, with additional agreements anticipated as infrastructure continues to develop. This deal not only marks a pivotal moment in energy cooperation between Israel and Egypt but also sets the stage for evolving dynamics in the broader East Mediterranean area.