Leviathan partners ink $610m deal for new pipeline to boost gas exports to Egypt

US energy giant Chevron and its partners in the Leviathan reservoir off Israel’s Mediterranean coast have inked a $610 million deal with state-owned pipeline operator Israel Natural Gas Lines for the construction of a new pipeline to bolster natural gas exports to Egypt.

Chevron, which holds a 39.66 percent stake in Leviathan, said the engineering, procurement, and construction (EPC) contract is for a 65-kilometer (40-kilometer) pipeline to transport gas from the field running from Ramat Hovav in southern Israel to the Nitzana crossing on the Israeli-Egyptian border. The contract is for a period of 15 years.

The Niztana export route will transport at least 600 million cubic feet of natural gas per day, once construction of the pipeline is completed in 2028. The pipeline route has the potential to increase Israel’s total export capacity to Egypt to more than 2.2 billion cubic feet per day, Chevron said.

“This milestone reflects Chevron’s commitment to advancing energy security in Israel and regionally,” said Jack Baker, managing director of Chevron’s Eastern Mediterranean Business Unit. “The Nitzana export route will deliver substantial domestic economic benefits and also support energy security across the Eastern Mediterranean region.”

The deal comes after partners in the Leviathan reservoir announced in August a $35 billion agreement to supply natural gas to Egypt, marking the largest export deal in Israel’s history. The deal is expected to funnel hundreds of millions of shekels in revenues from gas royalties and taxes to Israel’s state coffers.

Leviathan, one of the world’s largest deep-water gas discoveries, contains an estimated 600 bcm of gas located about 120 kilometers west of the port city of Haifa at a water depth of 1.7 kilometers. Other partners in the gas field include Israel’s NewMed Energy, formerly Delek Drilling (part of Yitzhak Tshuva’s Delek Group), which owns a 45.3% stake; and Ratio Oil Corp., with a 15% stake.

“Leviathan is a national project and its expansion is the anchor of Israel’s energy security for the coming decades,” said NewMed CEO Yossi Abu. “The Nitzana pipeline project is a direct continuation of the huge deal we signed with our Egyptian partners, and both of them together move us forward toward making a final investment decision worth billions of dollars in the expansion project.”

Amid the ongoing war with the Hamas terror group in Gaza, Israel’s natural gas exports to Egypt and Jordan increased by more than 13% in 2024 year-on-year, accounting for about half of Israeli gas production. State revenue collected from gas royalties soared almost 11% to a record NIS 2.37 billion ($713 million) in 2024.

Natural gas from Leviathan started to flow to the Israeli domestic market in December 2019. The partners in the Leviathan reservoir began exporting natural gas to Egypt in January 2020 after signing a deal for 60 bcm, which is expected to be supplied by the early 2030s. To date, Leviathan has supplied 23.5 bcm of gas to the Egyptian market.

Both Israel and Egypt have emerged as gas exporters in recent years following major offshore discoveries. Israeli gas accounts for about 15% to 20% of Egypt’s consumption, according to data from the Joint Organisations Data Initiative.

In June 2022, Israel, Egypt, and the European Union signed a memorandum of understanding that will see Israel export its natural gas to the bloc for the first time. According to the agreement, Israeli gas will be supplied via Egypt’s liquefied natural gas (LNG) plants to the European Union.