Israel began exporting natural gas to Egypt on Wednesday being one of the most important deals the countries have been signed since they made peace decades ago.
Dolphinus Holdings, a private firm in Egypt will purchase 85 billion cubic meters (bcm) of gas, worth an estimated $19.5 billion, from Israel’s Leviathan and Tamar offshore fields over 15 years.
Yossi Abu, CEO of Israel’s Delek Drilling, one of the partners in Leviathan and Tamar, said the landmark arrangement “marks a new era in the Middle East energy sector.”
two Egyptian industry sources said that Israel will initially export 200 million cubic feet of gas per day to Egypt,
According to Delek, by the second half of 2022 gas from Leviathon will be supplied to Dolphinus at a rate of 2.1 billion cubic meters per year, increasing to 4.7 billion cubic meters per year.
The gas is being supplied through a subsea pipeline connecting Israel and Sinai peninsula in Egypt.
Later this year, exports of Tamar gas to Dolphinus are expected to start.
Israel officials have called the export of gas to Egypt the most noteworthy deal to be signed since the countries signed a historic peace treaty in 1979.
With some of the gas expected to be re-exported to Europe through liquefied natural gas (LNG) plants, Egypt is hoping the deal will help it become a regional energy hub.
Egypt’s Minister of Petroleum & Mineral Resources, Tarek El Molla said the country is currently exporting one billion cubic feet of gas to Europe every month through 10 shipments.
The minister also said that after restarting the Damietta LNG plant, Egypt wanted to boost gas shipments to Europe to 20 a month.
For years, Damietta has been idle due to a lack of gas supply during a dispute with Union Fenosa Gas (UFG), a joint venture between Spain’s Gas Natural and Italy’s Eni.
Union Fenosa Gas(UFG) owns 80 per cent of Damietta, with the remaining 20 per cent split evenly between the state-owned Egyptian Natural Gas Holding Company and the Egyptian General Petroleum Corporation.
The minister also said Egypt was planning in bidding the oil drilling in the western Mediterranean Sea and was in talks with Exxon Mobile, Chevron and Total.