Egypt has signed a landmark $35 billion natural gas supply agreement with Israel’s NewMed Energy, securing 130 billion cubic meters (bcm) of gas through 2040 in a bid to strengthen its role as the Eastern Mediterranean’s leading energy hub, the company announced on August 7.
Phased output boost
The deal, finalized with Egyptian buyer Blue Ocean Energy, will support the planned expansion of Israel’s Leviathan gas field and guarantee long-term supply stability.
In the first phase, daily deliveries will increase from 450 million standard cubic feet (MMSCF)—about 4.7 bcm annually—to 650 MMSCF (6.7 bcm) once Israel Natural Gas Lines completes the Ashdod–Ashkelon offshore link and commissions a third pipeline.
A second phase, targeted for completion by 2029, will raise output to as much as 1,250 MMSCF (12.9 bcm) annually, contingent on final investment approval for Leviathan’s next development stage and a transport deal for the proposed Nitzana pipeline to Egypt.
“This is the most strategically important export deal to ever occur in the Eastern Mediterranean and strengthens Egypt’s position as the most significant hub in the region,” NewMed CEO Yossi Abu said in a company statement.
Exports to Egypt will now continue until 2040, or until the contracted volumes are fully delivered, whichever comes first.
The Leviathan field, which began production in January 2020, currently supplies about 60 bcm of natural gas to Egypt under the original 2019 deal with Blue Ocean, delivering roughly 4.5 bcm annually. Spot, or interruptible, sales are also made and deducted from the total contract volume. That initial agreement is expected to conclude in the early 2030s, once the 60 bcm commitment is met.
The revised terms strengthen take-or-pay obligations for the additional volumes, with prices linked to a Brent-based formula and a minimum floor to safeguard long-term value. Price reviews for the new supply are set after five and 10 years, while existing pricing remains unchanged for earlier volumes.
Expanding regional energy ties
The agreement aligns with Egypt’s broader push to deepen regional cooperation and expand gas infrastructure. Talks are underway with Italy’s Eni for a $150 million LNG import terminal in Damietta, while Cyprus is advancing a 90-kilometre subsea pipeline to Egypt’s Zohr facilities, expected to deliver up to one billion cubic feet per day from 2026 or 2027.
Egypt’s LNG footprint is also growing: in July 2024, the Egyptian Natural Gas Holding Company reported five LNG shipments arriving at the Sumed Port in Ain Sokhna, underscoring the nation’s expanding role in both imports and exports.
By diversifying supply sources, scaling up pipeline and LNG capacity, and forging stronger regional alliances, Egypt is positioning itself as a reliable supplier for domestic needs and global markets.
