Israel hints at finalising $35bn gas export deal with Egypt

While the Israeli government still refuses to set an official date for launching the $35 billion gas-export agreement with Egypt, Cairo’s Ministry of Petroleum has, in recent hours, received clear signals from the Israeli company NewMed.

The company - which holds the Leviathan field concession alongside US firm Chevron - has indicated its readiness to move ahead with completing the outstanding portion of the deal signed in August 2025.

This would apply for a full year under the current terms, with the option to revisit gas-supply prices starting in January 2027.

This step is being read as an attempt by the Israeli company to reassure Cairo and its American partners without offering a final commitment before internal Israeli disputes over the gas-export deal are settled at the end of December.

Sources in Egypt’s Ministry of Petroleum told The New Arab's Arabic edition Al-Araby Al-Jadeed that the gas-supply agreement with Israeli parties is progressing positively, and that the Tel Aviv government does not oppose resuming exports under the current formula for one year.

This would be on the condition that priority of supply for the Israeli domestic market is preserved in case of disruptions at any of the fields supplying Egypt with around 1.1 billion cubic feet per day during the current winter season. Supplies are expected to be raised to between 1.6 and 1.8 billion cubic feet starting in June 2026.

According to well-informed Cairo sources, who declined to be named, Israel still refuses to announce an official date for pumping the new quantities. This is despite Leviathan partners - led by Chevron and NewMed Energy - informing Prime Minister Benjamin Netanyahu that any further delay threatens the investment viability of planned expansions, for which a final decision is due within two weeks.

Egyptian oil expert Hossam Arafat told Al-Araby Al-Jadeed that US pressure on Israel has intensified in recent days to push the deal forward. He said Washington is stepping up its contacts with Tel Aviv to settle outstanding issues as it seeks to protect Chevron’s investments.

Chevron owns around 40% of the field and is pressing for the agreement to begin, both to justify infrastructure expansion and to ensure stable supplies to Egypt. This would allow Egypt to operate the Idku and Damietta liquefaction plants at full capacity during winter, enabling increased LNG exports to Europe.

Arafat added that the US administration views stable gas flows to Egypt as a geostrategic matter. Washington fears that any sudden shortage could force Cairo to request additional Russian gas shipments during peak winter demand, which would conflict with Western sanctions policy and weaken US influence in Europe’s energy market.

Meanwhile, Egypt is becoming increasingly dependent on Israeli natural gas to offset declining output from domestic fields, particularly after reduced production at the Zohr field.

Government estimates suggest that any disruption in Israeli supplies could force Cairo to purchase LNG cargoes at current prices of more than $13 to $17 per million BTUs - roughly double the cost under the proposed Israeli supply deal.

The agreement is a central pillar of Egypt’s plan to boost LNG exports, a key source of foreign currency. The strategy has gained urgency after the United States became Egypt’s largest LNG supplier in 2025. The government aims to reduce its import bill and stabilise gas flows to power stations and industrial facilities.

Energy experts at MME and Bloomberg point to three main reasons behind Israel’s hesitation: internal disagreements over pricing, with Israeli Energy Minister Eli Cohen insisting on securing a low price for the domestic market; political considerations amid tensions with Egypt and pressure from the far-right within the Israeli government; and Israel’s use of the deal as a bargaining chip with the United States to obtain additional support on other strategic matters.

Although Cairo has not announced a timetable for implementing the agreement, Egyptian officials say the recent signals from Israel represent an initial breakthrough, suggesting Tel Aviv is willing to advance the deal at its minimum level during 2026.