Israel Starts Exporting Natural Gas to Egypt

Landmark deal called most significant since 1979 peace treaty.

Port of Eilat, Israel
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Israel has begun exporting natural gas to Egypt under what has been called one of the most important deals to have been signed by the neighboring countries since their historic 1979 peace treaty.

The terms of the deal call for Dolphinus Holdings, a private firm in Egypt, to purchase 85 Bcm of gas, worth an estimated $19.5 billion, from Israel’s Leviathan and Tamar offshore fields over 15 years via a subsea pipeline connecting Israel and Egypt’s Sinai Peninsula. Gas from Leviathan will be supplied to Dolphinus at a rate of 2.1 Bcm per year, rising to 4.7 Bcm per year by the second half of 2022, according to Delek Drilling, one of the partners in Leviathan and Tamar. Israel will initially export 200 MMcf/d, according to Egyptian industry sources.

Israeli Energy Minister Yuval Steinitz said that the Sinai Peninsula has sufficient capacity for current volumes; however, the option of building a second pipeline will be considered if demand from Egypt grows.

Egypt, which has boosted its own gas production in recent years, is hoping the Israeli gas deal will help it become a regional energy hub, according to Reuters, with some of the gas expected to be re-exported to Europe through LNG plants.

Israeli gas is not currently being sent to Egypt’s Idku LNG plant, but that could happen “in a few months,” Steinitz said.

He also said Israel was talking to Egypt and India about exporting surplus gas to Asia through the Suez Canal, and that Egypt could in the future join Israel, Cyprus, and Greece in the recently signed EastMed gas pipeline project.