Israel to approve record $35bn gas deal with Egypt following US pressure: reports

Israel is preparing to approve a $35 billion gas export deal with Egypt - the largest of its kind between the two states - following US pressure over the matter, according to Israeli media reports.

The deal had faced obstacles due to internal disputes in Israel and concerns about depleting reserves, with Israeli Energy Minister Eli Cohen announcing in November that the deal had been cancelled.

The Israeli newspaper Yediot Aharonot reported on Thursday however that Cohen intends to announce the ratification of the gas agreement with Egypt soon.

Meanwhile, the Dayan Energy Committee is preparing to publish its decisions regarding the quantities to be allocated for export versus those Israel will retain for domestic use.

This came after pressure from the United States and from American companies operating in Israeli gas fields, which feared that Cairo would withdraw from the deal.

The US administration, with the support of major energy companies, has been pressuring Israel to finalise the deal, as reported by Yediot Ahronot in October.

Cairo previously signed a massive $4 billion liquified natural gas deal with American energy firm Hartree Partners.

The agreement raised questions about whether it was a replacement for Israeli gas or merely a bargaining chip.

Israeli reports also revealed that US Energy Secretary Chris Wright cancelled a visit to Israel in protest against Cohen's refusal to ratify the export agreement to Egypt before receiving guarantees regarding the price allocated to the Israeli market.

Sources in the Israeli energy sector believe that the deal with Egypt will be announced before the budget discussions and will include terms for selling gas to the Israel Electric Corporation at pre-agreed prices, in an attempt to allay concerns about the impact of exports on Israeli electricity prices.

The Financial Times quoted a source familiar with the matter in November as saying that the Israeli reluctance to export gas to Egypt stemmed from political disagreements between Cairo and Tel Aviv, particularly a dispute about Egypt deploying troops in Sinai amid the Gaza war.

The agreement, signed in early August, stipulates that the partners in Israel's Leviathan gas field, led by Chevron and Israel's New Med Energy, will export 130 billion cubic meters of gas to Egypt between 2026 and 2040.

Initial gas flows are scheduled to increase from 4.5 billion cubic meters in 2025 to 6.5 billion cubic meters in early 2026, as part of the first phase of the agreement, which covers 20 billion cubic meters.

Israel tried to link the reversal of gas exports to Egypt to the near depletion of its reserves, given that reserve estimates range between 15 and 20 years.

The Israeli government is meeting on Thursday to discuss the 2026 budget, which includes a clause proposed by the Finance Ministry that, according to Israeli newspapers, would restrict natural gas exports from Israel.

There are concerns within the government that expanding exports could jeopardise energy security and increase electricity prices, given that approximately 70 percent of Israel's electricity needs are met by natural gas.

Tel Aviv is reportedly grappling with a complex balancing act between preserving Israel's gas reserves from the Tamar and Leviathan fields, operated by Chevron, and strengthening economic ties with regional countries such as Egypt and Jordan through increased exports.

This article is based on a report from The New Arab's Arabic-language sister site, Al-Araby Al-Jadeed.