Record Deal Finally Approved

Israeli Prime Minister Benjamin Netanyahu has approved Israel’s largest-ever natural gas export agreement with Egypt, ending months of political and security-related delays.

The deal, valued at up to $35 billion, expands gas exports from Israel’s offshore Leviathan field and is designed to run through 2040 or until contracted volumes are fulfilled.

Netanyahu confirmed his decision, stating, “I approved the deal after I ensured our security interests and other vital interests, and I will not detail all of them here.”

The agreement was signed commercially in August 2025 by Leviathan partners Chevron, NewMed Energy, and Ratio Petroleum Energy, but required Israeli government approval to proceed.

That approval had been frozen since September amid concerns raised by senior ministers and security officials.

Volumes, Phases, and Infrastructure

Under the expanded agreement, Israel will supply approximately 130 billion cubic meters (BCM) of natural gas to Egypt, more than doubling earlier commitments.

This builds on a 2019 contract for roughly 60 BCM. Leviathan, one of the world’s largest deep-water gas discoveries with estimated reserves of about 600 BCM, began exporting gas to Egypt in 2020.

The deal is structured in two phases.

The first phase will begin in 2026, supplying around 20 BCM and increasing annual exports from roughly 4.7 BCM to about 6.7 BCM.

The second phase covers the remaining 110 BCM, contingent on field expansion and construction of new infrastructure, including an additional pipeline route via Nitzana.

Long-term production capacity at Leviathan is expected to rise to between 21 and 23 BCM per year.

Security and Political Delays

Government approval was delayed for months due to a combination of domestic energy concerns and regional security tensions. Israel’s Energy Minister Eli Cohen warned about domestic supply risks and reserve depletion.

Security officials raised concerns over alleged Egyptian violations of the 1979 peace treaty’s security annex, including military buildup in Sinai and weapons smuggling toward Gaza via the Philadelphi Corridor.

The freeze coincided with heightened tensions related to the Gaza conflict, Egypt’s role at the Rafah crossing, and disagreements over Palestinian displacement.

Netanyahu reportedly paused progress in September 2025 and linked approval to Egyptian steps on security cooperation and treaty compliance. U.S. involvement, partly due to Chevron’s stake, and renewed negotiations helped resolve outstanding issues in December.

Strategic and Economic Impact

For Egypt, the deal helps address energy shortages, declining domestic gas production, and recurring electricity blackouts, while reducing reliance on liquefied natural gas imports and supporting LNG re-exports.

For Israel, the agreement is expected to generate hundreds of millions of dollars annually in royalties and taxes while reinforcing Egypt’s role as Israel’s primary gas export hub.