#Israel #Tel Aviv #Egypt #NewMed Energy #Leviathan Reservoir

Historic Gas Export Deal Signed by NewMed Energy

In a landmark achievement for Israel's energy sector, NewMed Energy, along with its project partners, has finalized the most significant gas export agreement in the history of the country. The deal is valued at an impressive $35 billion and involves the export of natural gas from the Leviathan Reservoir to Egypt. This agreement highlights the growing importance of natural gas as a critical energy source in the region.

Overview of the Agreement

The total quantity of gas to be exported is approximately 130 billion cubic meters (BCM), which translates to around 4.59 trillion cubic feet (TCF). The contract is structured in two phases, with the initial phase commencing in 2026, involving the sale of about 20 BCM (0.7 TCF). Following this, the second phase will be rolled out post-expansion of the Leviathan project, aiming to export an additional 110 BCM (3.88 TCF).

This significant export arrangement is expected to generate revenue estimated at $35 billion by 2040, supporting Israel's energy market until at least 2064, thanks to an existing export agreement with Egypt covering around 60 BCM.

Historical Context and Development

The Leviathan gas field, which started its production journey in January 2020, has already been supplying natural gas to Egypt through its partner, Blue Ocean Energy. To date, about 23.5 BCM of gas has been successfully sold under the existing arrangements.

The current agreement will supersede this previous contract, ensuring continuous energy supply and expanding export capabilities. The initial phase will commence with two major projects aimed at enhancing production and transport capacity:
1. Connection of a Third Pipeline from the Leviathan Reservoir to the production platform, increasing output capacity by enabling more than 14 BCM (0.5 TCF) per year.
2. Enhancements to the Ashdod-Ashkelon pipeline, which will further augment natural gas transportation capacity between Israel and Egypt.

These essential upgrades are projected to be completed in early 2026, setting the stage for the first phase of this crucial export deal.

Future Expansion Plans

The second phase of the agreement, which is contingent on the completion of the Leviathan expansion project, is anticipated to further increase Israel's natural gas production by around 30%. This expansion aims to boost annual production capacity to approximately 21 BCM (0.74 TCF) and may even reach upward of 23 BCM in subsequent assessments.

As part of this comprehensive development plan, preparations are underway to construct a new pipeline to Nitzana, aimed at optimizing export capacities. Adopting a pricing structure mainly linked to Brent crude oil prices, the total gas sales expected from this deal will provide substantial financial benefits to all associated partners.

Strategic Implications

Yossi Abu, CEO of NewMed Energy, underscored the strategic importance of this export agreement, stating it solidifies Egypt's role as a pivotal energy hub in the Eastern Mediterranean. He expressed gratitude to all partners involved and stressed that the Leviathan gas field continues to offer considerable national and international advantages.

Furthermore, the deal is anticipated to foster enhanced collaboration between countries in the region, bolstering the prospects of natural gas and energy cooperation moving forward. NewMed Energy is also hosting a webinar to discuss further details about this agreement and its implications.

In conclusion, the signing of this monumental gas export agreement not only signifies a new chapter for Israel's energy market but also promises broader regional benefits, making energy collaboration a cornerstone for international relations in the Mediterranean.