Touted as the largest gas export agreement in Israel’s history, NewMed Energy and its partners in the Chevron-operated Leviathan gas project offshore Israel have inked a deal to double the current long-term contract sales of natural gas to Egypt, paving the way for a final investment decision (FID) on the project’s Phase 1B expansion plan.
The agreement with Blue Ocean Energy, Leviathan’s off-taker for exports to Egypt, was reported in a filing with the Israel Securities Authority on 7 August 2025.
Leviathan has been supplying Egypt through Blue Ocean under a long-term agreement for approximately 2.11 Tcf of gas signed in 2019 that will end when the contracted amount is sold in its entirety, most likely in the early 2030s, according to NewMed.
The new deal eventually would replace the 2019 agreement, extending gas deliveries to 2040 or whenever the stipulated quantities are reached. It also expands Leviathan’s export obligations to 4.59 Tcf of natural gas, which NewMed has valued at $35 billion.
Investment in New Infrastructure
The ramp-up of production is planned over two stages. Stage 1 is expected to be completed in the first half of 2026, underpinning 0.7 Tcf of the additional commitment by connecting a third pipeline from the Leviathan reservoir to Levithan’s production platform, which raises production to over 0.5 Tcf per year with support from the expansion of the East Mediterranean Gas pipeline between Ashkelon, Israel, and Arish, Egypt, according to NewMed.
Stage 2 would deliver the larger 3.88 Tcf volume pledged in the contract but only after Phase 1B of the Leviathan expansion is completed and a fourth transmission pipeline is laid from Israel to Egypt via Nitzana, Israel, raising Leviathan’s production capacity to 0.74 Tcf, according to NewMed.
“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 Energy CEO Yossi Abu said in a news release. “The (Leviathan) reservoir’s expansion has been NewMed’s key priority for years,” he added.
Field Development Plan Awaits FID
With a new contract extending long-term cash flow guarantees as well as obligating NewMed to boost Leviathan’s production, Abu confirmed that the partnership expects to declare FID in the fourth quarter of 2025 on its $2.4 billion Phase 1B Leviathan expansion, which is expected to become operational in 2029.
Abu’s statement came during NewMed’s second quarter 2025 earnings call, which was held the same day as the export contract announcement.
In an update to its development plan filed with the Israeli Ministry of Energy and Infrastructure and the Israel Securities Authority in late February, NewMed reported plans to drill three additional production wells, install related subsea systems, and expand processing facilities on the Leviathan platform.
A fourth pipeline also is planned to be laid between the reservoir and production platform to boost the field’s annual production capacity to the target of approximately .81 Tcf/yr.
Investment Unlocks Production Growth
The facilities of Leviathan Phase 1A were designed to support expanded production with the addition of new modules. While existing infrastructure supports gas deliveries to Israel’s domestic market, Phase B of the project includes liquefaction to enable export of Leviathan gas to Europe and the Far East as liquefied natural gas (LNG), according to NewMed’s website.
Negotiations are being pursued with LNG facilities in Egypt and Leviathan’s partners have discussed options to anchor a floating LNG facility (FLNG) in Israel’s exclusive economic zone, the company said.
NewMed, which holds a working 45.34% interest in Leviathan, estimated Leviathan’s reserves at 21.2 Tcf in its discounted cash flow report and says it expects the field to remain in production until at least 2064. Chevron Mediterranean controls a 39.66% operator interest in Leviathan, with the Israeli limited partnership Ratio Energies claiming 15%.
