Despite having the potential to diversify its energy sources, Egypt continues to rely on the unstable relationship with Israel for gas imports
This summer, news broke that Egypt had signed an unprecedented $35 billion gas agreement with Israel. The announcement was made on August 7 by Israeli company NewMed Energy (formerly known as Delek Drilling), which owns a 45.3% stake in the Leviathan gas field.
The new agreement involves the export of 130 billion cubic meters of natural gas to Egypt by 2040 or until all contracted volumes are fulfilled. The contract marks the largest energy deal ever signed between the two countries and represents the biggest export transaction in Israel’s history. It is expected to expand the existing export agreement by 60 billion cubic meters. The gas will be sourced from the Leviathan field, which holds approximately 600 billion cubic meters of natural gas.
Israeli Minister of Energy Eli Cohen confirmed the information. While the multibillion-dollar export deal was great news for Israel, Egypt had to publicly justify itself in connection with the country’s stance on the Gaza conflict. Cairo officially commented on the deal only a week later: on August 13, Egyptian Prime Minister Mostafa Madbouly stated that the contract reached with NewMed Energy is merely an extension of an agreement signed in 2019, emphasizing that it would not alter Egypt’s steadfast support for Palestine.
“There has been debate and confusion over the announcement about extending the agreement with NewMed Energy, the Leviathan field partner. This agreement with Egypt has been in place since 2019,” Madbouly said. He added that Israel intends to integrate its production into Egypt’s gas infrastructure, since Egypt is a regional energy hub.
According to Madbouly, Egypt is now not just a gas producer but also an international trading center for natural gas; the country possesses two liquefied natural gas facilities in Idku and Damietta.
FILE PHOTO. Egyptian Prime Minister Mostafa Madbouly
During the same press conference, Madbouly stressed that the new deal with Israel would not impact Cairo’s foreign policy decisions or its stance on the Palestinian issue. He pointed out that the agreement with Israel has been active since 2019, while the war in Gaza has persisted for the last two years. Since the start of the conflict in October 2023, Egypt has consistently rejected any attempts to “liquidate the Palestinian cause” or forcibly displace Palestinians from their lands.
“This position is not tied to commercial or economic relations,” Madbouly said. “On the contrary, Egypt’s position on the Palestinian cause is fixed and will not be altered by such agreements.”
For Egypt, the Palestinian issue is particularly sensitive as it touches on national sovereignty. Israel first proposed to displace the Palestinian population from Gaza to the Sinai Peninsula, which is part of Egypt, in the 1960s, and the discussions have resurfaced multiple times since then.
The events of October 2023 have once again thrust Cairo into the spotlight. For Egypt, this situation is unacceptable for multiple reasons. Specifically, the potential displacement of Palestinians to Sinai could move the military conflict between the IDF and Hamas onto Egyptian territory.
Moreover, Hamas continues to be perceived by Egyptian society as an offshoot of the Muslim Brotherhood, which has been designated a terrorist organization in Egypt. This perception persists despite Hamas’s significant departure from its original ideology since its inception in the late 1980s and its demonstrated autonomy from its parent organization.
Israel-Egypt gas relations
Israeli gas is transported to Egypt through an underwater pipeline from the Leviathan and Tamar fields to a reception terminal in North Sinai. Cairo utilizes part of these supplies to meet domestic demand, while re-exporting some as liquefied natural gas from its facilities in Idku and Damietta to European and Asian markets.
Despite the ongoing conflict in the Middle East, exports of Israeli natural gas to Egypt and Jordan rose by over 13% in 2024 compared to the previous year, accounting for nearly half of Israel’s total gas production.
Government revenues from gas profits surged by almost 11%, reaching a record high of $694 million in 2024. According to Egypt’s Ministry of Petroleum, the country imported 14.6 billion cubic meters of natural gas in 2024, which is a 70% increase from the previous year.
FILE PHOTO. Leviathan gas field in the Mediterranean Sea
Historically, Egypt has been a net exporter of natural gas and supplied Europe and Israel. In 2005, a 20-year supply agreement was signed with Israel that covered around 40% of Israel’s energy needs but became a source of embarrassment for Egypt, as the gas was sold at below-market prices. This agreement was terminated in 2012 at Cairo’s initiative.
By the mid-2010s, Egypt was forced to import gas to satisfy rising domestic demand. In 2015, the discovery of the Zohr gas field in the Mediterranean raised Egypt’s hopes for self-sufficiency and the potential to become an energy export hub in the eastern Mediterranean. Production peaked at 31 billion cubic meters per year in 2021; however, due to technical issues, annual output later declined to between 24 and 26 billion cubic meters.
Currently, Egypt is importing gas from Israel, which discovered the Tamar and Leviathan natural gas fields between 2009 and 2010. In June 2022, due to anti-Russia sanctions, Egypt, the EU, and Israel signed a three-year agreement for the transfer of natural gas from Israel to the European market after it is liquefied in Egyptian facilities in Idku and Damietta. The deal was expected to replace about 10% of Russian gas supplies to the EU and provide Egypt with much-needed foreign currency. It was hailed by then-Israeli Prime Minister Naftali Bennett as “the most significant agreement since the peace treaty signed in 1979,” while Egyptian President Abdel Fattah el-Sisi enthusiastically declared,“Egypt has scored a goal!”
The current gas deal impacts not only Egypt and Israel but also the United States, which benefits through Chevron, a company that holds a 40% stake in the Leviathan gas field. European countries are also set to gain, receiving Israeli gas via Egypt as they seek to increase supplies and reduce their dependency on Russian fuel.
Amid Egypt’s severe shortage of hard currency and frequent power outages in cities, particularly in the summer, Cairo is increasingly reliant on Israeli energy supplies. Since beginning production at the Tamar and Leviathan fields in January 2020, Israel has emerged as Egypt’s primary gas exporter. By the end of August, it was reported that Egypt, having struck a $35 billion supply deal with Israel, was preparing to construct another pipeline costing $400 million to facilitate the transport of additional fuel.
In the context of the complex political and military landscape in the Middle East, Israel appears to be leveraging this situation as “economic weaponry” to exert pressure on Egypt. In early September, Israeli Prime Minister Benjamin Netanyahu instructed that the gas deal should not go ahead without his personal approval. Netanyahu cited violations of the 1978 Camp David Accords as justification, claiming that Egypt had sent military reinforcements to Sinai and constructed tunnels for the storage of weapons.
Cairo did not issue an official response. However, shortly thereafter, Diaa Rashwan, head of the Egyptian State Information Service (SIS), characterized Netanyahu’s threats to freeze the multibillion-dollar gas deal as mere political pressure that would have little real effect. Rashwan asserted that Egypt has alternative gas supply options that insulate it from such threats, and contended that Israel is actually more dependent on the agreement than Egypt. He dismissed reports of weapons smuggling into Gaza through tunnels in Sinai and emphasized that the Egyptian military is the only force in the region capable of standing up to Israel.
Incidentally, US-led international monitoring forces responsible for overseeing compliance with the peace treaty between Israel and Egypt have ceased monitoring Egypt’s military presence in Sinai and inspecting tunnels following the events of October 7, 2023.
In recent months, Israeli officials, including Israeli Ambassador to the US Yechiel Leiter, have repeatedly urged the Trump administration to resume monitoring efforts, but so far without success. Last summer, Leiter stated that without Israel’s consent and ignoring pressure from the US, Egypt has constructed tunnels in Sinai suitable for arms storage, expanded airport runways, and deployed infantry and armored units beyond what is allowed under the Camp David Accords.
Despite the strong rhetoric from both sides, the gas deal is already being implemented. In mid-September, a consortium led by Chevron and NewMed Energy reached an agreement with the state-owned Israel Natural Gas Lines (IMGL) to construct a new gas pipeline to Egypt. Named ‘Nessana’ after the Israeli town it passes through, the project will have a capacity of 600 million cubic feet (about 17 million cubic meters) per day and is expected to be completed within three years. This will boost Israel’s total export capacity to Egypt to over 2.2 billion cubic feet (62 billion cubic meters) daily.
Palestinians walk amid the ruins of Gaza City, Sunday, Oct. 26, 2025.
Despite the complex situation in the Middle East, Egypt is increasingly relying on Israel for its energy security, even though it has viable alternatives to diversify its energy sources. For instance, Egypt could import gas from friendly nations such as Algeria, Qatar, Iraq, Libya, and Russia, increase investments in local production, and accelerate projects in renewable energy, such as solar and wind energy. Importing gas from Russia is particularly relevant now due to Europe’s ongoing efforts to reduce Russian gas supplies. Türkiye might also play a role in transporting gas from Russia to Egypt via existing pipelines, especially since Moscow has previously announced plans for a gas distribution hub in Türkiye.
Significant hopes are pinned on the El Dabaa Nuclear Power Plant, a megaproject being developed by the Russian state corporation Rosatom along the Mediterranean coast. The project includes four nuclear reactors with a total capacity of 4,800 megawatts.
El Dabaa, Egypt’s first nuclear power station, is being constructed in the city of Dabaa in Matrouh Governorate, approximately 300 kilometers northwest of Cairo. It offers substantial employment opportunities for Egyptians; according to Russian Deputy Prime Minister Aleksey Overchuk, “About 27,000 people work on-site daily, most of whom are Egyptian citizens.” While the plant is expected to begin operations in 2029-2030, a trial run of the first reactor is scheduled for the latter half of 2027. Once operational, El Dabaa will supply around 10% of Egypt’s electricity.
FILE PHOTO. Tamar natural gas field in the Mediterranean Sea
Despite having the potential to diversify its energy sources, Egypt continues to rely on the unstable relationship with Israel for gas imports. Severing ties with Israel would likely garner significant support from the Egyptian population, who sympathize with the Palestinian cause. The vast majority of Egyptians could endure new power outages, fuel shortages, and a drastic reduction in consumption, since it’s a matter of Arab solidarity. However, facing a challenging economic and geopolitical landscape, and under pressure from both Israel and the EU, Egypt is hesitant to pursue bolder alternatives and clings to existing contracts.
