Delek Drilling, a subsidiary of the Delek Group, on Monday announced that it has signed two binding agreements with the Egyptian company Delphinus, to supply natural gas to Egypt from the Leviathan and Tamar reservoirs. The deal will encompass a total volume of some 64 Billion Cubic Meters over a period of 10 years, at an estimated value of $15 billion.
The announcement by the Leviathan and Tamar partnerships should eliminate concerns that the local Israeli market would be saturated with natural gas. Last November, Egypt announced its plan to begin to rely exclusively on its recently discovered offshore liquid gas reserves and its two existing liquid gas facilities. Back in November 2017, Egypt said it would begin exporting its gas to other countries in 2019, and that its offshore gas reserves are larger than the Leviathan and Tamar reserves combined.
Well, that didn’t happen.
Prime Minister Benjamin Netanyahu on Monday issued a statement saying, “I welcome the historic agreement that was announced on the export of Israeli gas to Egypt. This will put billions into the state treasury to benefit the education, health and social welfare of Israel’s citizens.”
“Many people did not believe in the gas outline,” the PM recalled. “We led it knowing that it would strengthen our security, economy and regional relations, but – above all – that it would strengthen Israel’s citizens. This is a joyous day.”
Let’s hope so, and let’s watch the effect of taxes from the deal on Israel’s own energy market. At the moment, a gallon of gasoline still costs Israeli motorists around $6.8 – most of which are taxes.
Shares of the Noble Energy Inc. and Delek Drilling-LP partnership have been rising sharply in response to the announcement, getting up to 25%.
According to the Delek announcement, the deal is expected to begin with the approval of the use of the infrastructure required for the transmission of natural gas to Egypt, and will continue until a total of 64 BCM had been delivered, or by the end of 2030, whichever comes first.