Israeli Prime Minister Benjamin Netanyahu has announced the approval of a landmark $35 billion natural gas export agreement with Egypt, solidifying a key strategic partnership and reshaping the energy map of the Eastern Mediterranean.
The deal, hailed by Netanyahu as "the largest gas deal in Israel's history," involves the sale of approximately 130 billion cubic meters (BCM) of natural gas to Egypt over 15 years, with deliveries projected to run through 2040. The gas will primarily flow from Israel's massive offshore Leviathan and Tamar fields, operated by the US energy giant Chevron, via expanded subsea pipeline infrastructure.
Strategic Implications: A "Cold Peace" Warms
Beyond the immense economic value, both governments framed the deal as a cornerstone of regional stability. "It will bring billions into the state’s coffers for the benefit of Israel’s citizens... But beyond the money, it strengthens the political and security ties between Israel and Egypt in a dramatic way," Netanyahu stated. For Egypt, the deal is a critical step in securing its role as a regional energy hub. Egypt will use its liquefied natural gas (LNG) terminals to process the imported Israeli gas for re-export to European and global markets, capitalizing on Europe's push to diversify away from Russian energy.
A Long Road to Final Approval
The announcement culminates months of intense negotiations that began with an initial framework in August 2025. Progress stalled as the Israeli government, led by Energy Minister Eli Cohen, pushed for terms more favorable to Israel's domestic energy security. This included demands for guaranteed low prices for the Israeli market and priority supply for the domestic economy if other gas fields experienced issues. The delay was so significant that U.S. Energy Secretary Chris Wright reportedly canceled a trip to Israel over the impasse. The final push for approval came in early December, ahead of a planned meeting between Netanyahu and U.S. President Donald Trump.
Economic and Geopolitical Winds
The deal arrives at a crucial time for both nations. Egypt is facing a sharp decline in its domestic gas production amid rising consumption, creating an urgent need for reliable imports. During the negotiation delays, regional competitor Qatar even attempted to offer Egypt an alternative LNG supply. For Israel, the deal represents a major economic and diplomatic victory, anchoring its position as a growing energy exporter.
The Road Ahead: Construction and Controversy
While the contract is a monumental achievement, significant work remains. A final investment decision for the necessary expansion of the Leviathan field is expected in 2026, with full operations not projected until 2029. The deal also operates within a complex legal landscape.
A recent analysis by the watchdog group Global Witness argued that the existing pipeline used for Israeli exports to Egypt crosses Palestinian maritime zones without consent, potentially creating legal complications for involved companies and the European Union.
The agreement underscores a significant evolution in Middle Eastern geopolitics, where economic interdependence and energy security are becoming powerful drivers of partnership between historic neighbors.
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