An Israeli energy company on Monday announced a $15 billion deal to supply natural gas to Egypt, in the largest export agreement to date for Israel's nascent natural gas industry.
Delek Drilling and its U.S. partner, Noble Energy, signed a deal to sell a total of 64 billion cubic meters of gas over a 10-year period to Egyptian company Dolphinus Holdings.
The gas will be delivered 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.
Tamar, discovered some 80 kilometers (50 miles) west of Haifa in 2009, is believed to have reserves of up to 238 billion cubic meters. Leviathan, discovered in 2010 roughly 130 kilometers (81 miles) west of Haifa, holds an estimated 500 billion cubic meters of natural gas. The field was the world's largest offshore discovery of the past decade.
Prime Minister Benjamin Netanyahu hailed what he called "the historic agreement," saying it would "provide billions of dollars to state coffers as well, in favor of education, health and welfare.
"Many didn't believe in the natural gas framework, which we promoted knowing it would bolster our economy and our regional ties, but above all, bolster the Israeli public. This is a joyous day," he said.
Energy Minister Yuval Steinitz called the deal a "very important milestone."
"This deal again proves that the natural gas framework does work. This massive export deal, together with the gas deal with Jordan, positions Israel as a key player in the regional energy market and it is expected to strengthen ties between the two countries.
"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. The critics will keep criticizing and we will keep promoting the Israeli energy market and maintain our strategic assets," he said.
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 cooperation 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 said.
Yitzhak Tshuva, Delek Group's controlling shareholder, said, "We are at an important milestone in realizing the vision of transforming Israel into a significant gas exporter to the region. This deal will strengthen ties between Israel and its neighbors and increase economic cooperation between them."
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 strike peace with Israel, in 1979, but past economic agreements have been controversial in Egypt, where support for the Palestinians runs high. There was no immediate comment from Egyptian officials.
Several routes for shipping the gas are under consideration, with an existing pipeline between Jordan and Egypt a strong contender, Abu said. Israel already delivers gas to Jordan.
Israel has been developing natural gas fields off its Mediterranean coast for the past decade. In 2016, Delek and Noble signed Israel's first export agreement, reaching a $10 billion, 15-year deal to provide 45 billion cubic meters of gas to Jordan.
The gas deals reflect Israel's shared strategic interests with Jordan and Egypt, both of which are important U.S. allies.
Israel maintains quiet security ties with both countries, particularly Egypt, which is battling an Islamic militant insurgency in its Sinai Desert, near the Israeli border.
