In a move considered the most significant in the economic relationship between the two sides, Israeli Prime Minister Benjamin Netanyahu announced today (Wednesday) his official approval of expanding natural gas exports to Egypt. This agreement is considered the largest export deal in the history of Israel's energy sector, with a total value estimated at approximately $35 billion (equivalent to 112 billion shekels), opening new horizons for energy cooperation in the Eastern Mediterranean region.
Details of the biggest deal in the history of the energy sector
In a televised statement, Netanyahu confirmed that this step followed intensive negotiations and strategic reviews, noting that the deal is being made in cooperation with the American energy giant Chevron and other Israeli partners. The agreement primarily aims to increase the flow of gas from the Leviathan offshore field, one of the largest gas fields discovered in the eastern Mediterranean basin, to ensure a sustainable and long-term supply to the Egyptian market.
Solutions to the energy crisis and the decline in domestic production in Egypt
This deal comes at a crucial time for Cairo, which has faced increasing challenges in its energy sector since 2022. Despite previous major discoveries such as the Zohr field, Egyptian domestic production has experienced a natural decline in wells, leading to a gap between supply and rising demand, particularly during the peak summer electricity consumption. The imported Israeli gas is expected to alleviate power outages and provide the fuel needed to operate power plants, thus reducing the cost of importing liquefied natural gas and fuel oil, which has strained the Egyptian budget in hard currency.
Strategic dimensions: Egypt as a regional energy hub
The importance of this deal extends beyond Egyptian domestic consumption; it also encompasses Cairo's regional ambitions to become a regional energy hub. Egypt possesses a unique infrastructure in the region, namely the two gas liquefaction plants in Idku and Damietta, enabling it to receive gas from neighboring countries, liquefy it, and then re-export it to energy-hungry European markets, particularly as the continent seeks to diversify its energy sources away from Russian gas.
Enhancing economic and geopolitical stability
Netanyahu noted that this deal, which had previously faced some bureaucratic hurdles, will play a pivotal role in bolstering regional stability by creating a network of shared economic interests. Economically, the deal will generate substantial revenue for the Israeli treasury through taxes and sovereign wealth funds, which will be directed to benefit Israeli citizens, according to officials. The deal also reflects Chevron's growing role as a key player in Middle Eastern energy diplomacy, further strengthening the American investment presence in the region.
