Benjamin Netanyahu approves $35bn Israel-Egypt gas deal

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Israel has granted an export permit for as much as $35bn in natural gas to be sold to Egypt from the massive Leviathan gasfield, resolving a stand-off with the US after it lobbied on behalf of co-owner Chevron.

Prime Minister Benjamin Netanyahu touted the tax benefits of the deal, claiming that it would generate about $18bn in revenue for the state and strengthen Israel’s position as an energy exporter in the region.

The announcement, made on Wednesday night, came after a lengthy delay from when the deal was initially announced and a cancelled early November trip by US energy secretary Chris Wright, partly in frustration over Israel’s deferral of the export licence.

At the time, Israel’s energy minister Eli Cohen said he was holding up the export deal until he could secure better commercial terms for the local energy market. Netanyahu said late on Wednesday that he had made the decision to push through the export licence for reasons he could not fully disclose.

“I approved the deal after ensuring our security interests and other vital interests, which I will not detail here in full,” he said.

Cohen said the export licence was approved only after months of negotiations that “will improve the price of gas for the Israeli market”. He gave no details.

The vast majority of the gas will come from the Leviathan offshore gasfield, co-owned by Chevron, Israel’s NewMed and Ratio Oil. It will almost triple flows of natural gas from the Leviathan to Egypt, deepening the country’s reliance on Israeli gas at a time when many Egyptians are angry at their neighbour’s devastating offensive in Gaza.

The deal, signed in August, would see NewMed send an additional 7.5bn cubic metres of natural gas, much of it through a new pipeline, by 2029. NewMed said the export agreement covers a total of 130 bcm until 2040.

NewMed said at the time of the signing that it would be investing $2.5bn to drill two new wells.

The Leviathan is one of the largest gasfields in the Mediterranean and contains about 600 bcm, with production expected to last until 2064. 

Israel has sought to use that gas to tie its neighbours, including Jordan and Egypt, into commercial agreements that deepen their dependence on a one-time foe and turn Israel into a major energy player in the Mediterranean.