Israel and Egypt have signed a major agreement to export gas from Leviathan, Israel’s main gas field, to Egypt. This is the most expensive project of its kind that the Israeli state has signed to date. The project was announced by NewMed Energy, a major shareholder in the Leviathan gas field. While Israel is known for oppressing and persecuting Palestinian Muslims, and is currently carrying out aggressive attacks against the people of Gaza in Palestine, killing over 61,000 people and starving the city’s residents, Egypt’s establishment of such an agreement with Israel, as an Arab country, has drawn criticism from many. Many Egyptian citizens also oppose the government’s decision. Many characterize the establishment of such an agreement with Israel as supporting Israel in the Gaza war.
This $35 billion project will supply gas from Leviathan to Egypt. The agreement is expected to solve Egypt’s energy problem. Egypt’s gas production began to decline in 2022. As domestic gas production was insufficient for its citizens, the country had been spending billions of dollars importing liquefied gas from foreign countries. Egypt generally relies on Israel for gas. Statistics show that 20 percent of the gas used in Egypt is currently purchased from Israel. Leviathan began supplying gas to Egypt when the gas field was first established in 2020. Among Arab countries, Israel exports gas to Jordan in addition to Egypt.
During the 12-day war between Israel and Iran last June, gas exports from Leviathan were suspended for security reasons. However, the company has now resumed operations. Under the newly announced agreement, the Leviathan gas field, located off the coast of Israel and in the Mediterranean Sea, will supply a total of 130 billion cubic meters of gas to Egypt by 2040. The gas will be supplied through pipelines established between Leviathan and Egypt. Supplying gas in its gaseous form is cheaper than supplying liquefied natural gas (LNG). LNG is more expensive because the gas needs to be heavily compressed to liquefy it for transportation from one place to another. And when it reaches its destination, LNG must be converted back to gas. NewMed says that if the gas can be supplied directly to Egypt in its gaseous form without having to do this expensive process, it will save the Egyptian economy billions of dollars.
Israel previously sold gas at $7.75 per million British thermal units (MMBTU). Sources said in May that Israel wanted to increase the price of gas by 25 percent. It is understood that in the agreement Israel signed with Egypt, the price of gas has been increased by 20 percent. Under this agreement, Israel will start supplying gas to Egypt in 2026. This is after the establishment of gas pipelines. The initial supply is set at 20 billion cubic meters of gas. The remaining 110 billion cubic meters of gas will be supplied in the second phase.
