Leviathan gas supply deal potential ‘game changer’ for Egypt: analyst

A $35 billion natural gas supply agreement offers welcome leeway to Egypt as it seeks to bolster energy security, while also marking a strategic shift in energy sourcing, according to market watchers.

"It could be a game changer for the country," Carole Etienne, gas analyst at the International Energy Agency, said of the deal, announced Aug. 7.

Under the agreement, partners in Israel's Leviathan gas field will pipe 130 Bcm of gas to Egypt over some 15 years via current Leviathan offtaker Blue Ocean Energy.

"The volumes in question are huge," Etienne said.

Blue Ocean is currently contracted to take 4.5 Bcm/year from Leviathan under an original 2019 agreement for 60 Bcm. The existing agreement is expected to end in the early 2030s. The new agreement is set to eventually replace it, according to NewMed Energy, one of the Leviathan partners.

Declining domestic gas production has pushed Egypt from a net LNG exporter to a net importer in recent years. Since the start of 2025, it has brought in 3.67 million mt of LNG, up from 630,000 mt over the same period in 2024 and 60,000 mt in 2023, according to data from S&P Global Commodity Insights.

From late 2024 through 2026, Egypt has secured some 150-160 LNG cargos totalling about 11 Bcm (7.9 million mt) through short-term and spot deals, according to Etienne. At least 60 of these cargos totalling about 4.5-6 Bcm are due for arrival by the end of 2025. The rest are spread in 2025 and 2026 "depending on demand and pipeline flows," Etienne said.

The new agreement could quickly temper further LNG demand. According to Etienne, the fresh pipeline quantities could reduce Egypt's LNG import needs by 1-2 Bcm as soon as 2026.

Other market watchers also see the deal as a momentous, if somewhat anticipated, development.

"The new agreement is a key step toward improving Egypt's gas supply security," Commodity Insights Global LNG Senior Principle Analyst Mehrun Etebari said. However, he added, the increased pipeline supply was already expected in CI forecasts.

In late July, CI analysts forecast Egypt's LNG imports will hit about 7.9 million mt in 2025 and 11.1 million mt in 2026.

Diversification

In addition to the quantity supplied, the duration of the new Leviathan deal is another advantageous factor for Egyptian buyers, market watchers said. The long-term contract expands their sourcing away from the shorter-term LNG agreements they had been relying on, which helps Egypt since its acute demand had given it less bargaining power in the past, said Jean-Christian Heintz, Managing Director of Wideangle LNG, a consultancy.

"Being price takers, it's good to actually demonstrate that you can diversify your supply portfolio," he said. "You can have an arbitrage between LNG and gas."

While Heintz does not know the full details of existing LNG supply agreements, he said that added flexibility from the long-term Leviathan deal could help Egyptian buyers exercise any optionality they may have.

"It's probably going to help them curb the number of [LNG] cargos they need," Heintz said. "Maybe the marginal cargos or the optional cargos they had were more pricey, so maybe you are getting a better average price by buying less cargoes."

Regional LNG spot prices are down on year. Platts, part of S&P Global Commodity Insights, assessed the DES East Mediterranean LNG market at $10.943/MMBtu on Aug. 7. The price is about 12% lower than the same date in 2024, when it was assessed at $12.466/MMBtu.

A strategic shift

Risks remain for Egypt, though. In particular, analysts point to geopolitical uncertainties. Ongoing conflicts in the region, including the war in Gaza, could delay the start of new gas flows under the deal, expected in the first half of 2026.

Even once added exports begin, disruptions are still a possibility, especially in such a volatile region. In June, Israel temporarily halted gas flows to Egypt from the Leviathan field, prioritizing its domestic market amid its conflict with Iran.

Still, Etienne stressed the deal underscores an intention for Egypt to double down on more gas pipeline imports from Israel. In the long term, it's a strategic shift, she said. "It's a real change for Egypt."

NewMed Energy holds a 45.34% stake in the Leviathan Field, which is operated by Chevron (39.66%). The remaining 15% is held by Ratio Energies.