ISRAEL is to sell Egypt $15 billion-worth of natural gas in a massive deal that will strengthen ties between the two countries.
It is the largest-ever export agreement for Israel’s natural gas industry.
And it will mean that Israel will now be providing both Egypt and Jordan with natural gas, cementing links with its two neighbours despite historically “cold” peace treaties.
The gas will be delivered over a 10-year period from Israel’s Tamar gas field, which is already operational, and the larger “Leviathan” field, which is set to go online in late 2019.
The gas is expected to begin flowing late next year.
Prime Minister Benjamin Netanyahu said: “This will strengthen the citizens of Israel. It is a joyous day.”
He added that the “the historic agreement” would provide billions of dollars to state coffers as well.
Energy Minister Yuval Steinitz called the deal a “very important milestone”
“It is the first time since the signing of the peace agreements with Egypt and Jordan that there are big, significant, serious export deals between Israel and the Arab world,” he said.
Delek Drilling and its American partner, Noble Energy, signed the deal to sell a total of 64 billion cubic metres of gas over a 10-year period to Egyptian company Dolphinus Holdings.
Yossi Abu, chief executive of Delek Drilling, called the deal “great news” for both countries.
He said he expects most of the gas to be used for Egypt’s domestic market, but predicted it could pave the way for wider co-operation and help turn Egypt into an export hub for Israeli gas.
“I think that the main thing is that Egypt is becoming the real gas hub of the region,” he added.
Several routes for shipping the gas are under consideration, with an existing pipeline between Jordan and Egypt a strong contender, Abu said.
Gary Willingham, Noble Energy’s executive vice-president of operations, said: “These agreements continue to demonstrate the strength of the regional market for our natural gas in the eastern Mediterranean,”
Egypt was the first Arab country to make peace with Israel — in 1979 — but past economic agreements have been controversial in Egypt, where support for the Palestinians runs high.
Shares in Delek Drilling rose 28 per cent on the news and Delek Group shares were up 19 per cent.
Barclays analyst Tavy Rosner said weakness seen in Israeli gas shares over the past few months was due to investors’ doubts that gas exports would ever take place.
“We believe today’s announcement will pave the way to a re-rating of the shares,” he said.
The Leviathan and Tamar natural gas fields were discovered in 2010 and are thought to contain 800bn cubic metres of gas.