Egypt has committed to importing up to 130 bcm of Israeli gas over approximately 15 years, a deal valued at as much as $35 billion. This decision is not ideological but a pragmatic response to a domestic energy crisis. Egypt’s natural gas output has significantly declined from a peak of over 6 bcf/d in 2021 to around 3.5 bcf/d by April 2025. This shortfall has led to widespread rolling blackouts, disruptions in industrial operations, and a costly reliance on LNG imports. For instance, in May and June, Cairo sought 40–60 LNG cargoes, potentially costing around $3 billion, just to meet summer energy demands. The Leviathan contract, offering pipeline gas at predictable terms, integrates into Egypt’s existing network, alleviating budgetary pressure and stabilizing supply much more affordably than engaging with the volatile spot LNG market.

The viability of the Idku and Damietta LNG export plants, the only two operating in the region, is maintained by this gas. These plants have a combined liquefaction capacity of approximately 12 mtpa, with Idku contributing about 7.2 mtpa and Damietta around 5 mtpa. When Egyptian gas fields underperform, these plants are supplied by Israeli gas, enabling Egypt to re-export LNG for foreign currency or redirect the same volumes to the national grid during peak power demand. This arrangement effectively underwrites Egypt’s flexibility, allowing it to manage household, industrial, and export demands from a single source, thereby avoiding power cuts and emergency LNG imports.

The agreement’s embedded volume ramp, which will increase flows from approximately 4.5 bcm/yr to ~12 bcm/yr by 2029 (with 20 bcm front-loaded from 2026), aligns with Egypt’s near-term recovery. More dependable pipeline volumes will allow Idku and Damietta to operate more consistently, reducing Cairo’s need to use scarce FX reserves for ad-hoc LNG purchases. This represents both a cash-flow and an energy solution.

Israel’s geopolitical lever

For Israel, this agreement signifies a “pipeline foreign policy,” representing the largest export deal in its history. It facilitates the large-scale monetisation of the Leviathan gas field and funds new wells, along with a backup onshore pipeline to Nitzana. This infrastructure deeply integrates Israel into Egypt’s energy system. As these connections strengthen, Egypt’s grid stability and LNG exports become more reliant on Israeli supply, thereby shifting diplomatic leverage during routine interactions and crises. The pipeline also serves as a discreet communication channel; even minor disruptions receive significant attention from Cairo, European buyers, and Gulf financiers invested in Egypt’s stability.

The agreement significantly expands Israel’s influence within European gas markets. Since June 2022, the EU has supported a framework involving the EU, Egypt, and Israel to transport East Mediterranean gas to Europe. Each additional unit of Israeli gas processed at Idku or Damietta and then shipped to the EU solidifies Israel’s position as an indirect supplier to European utilities. This generates political influence in Brussels and fosters a commercial interest across the continent, where stakeholders now depend on the stability of Israeli upstream operations and the Egyptian transit corridor.

The pricing and flow of Israeli natural gas played a crucial role in Egypt’s recent scramble for Liquefied Natural Gas (LNG). Discussions even emerged regarding potential price increases. The new long-term contract between the two nations solidifies Israel’s leverage in these negotiations. Essentially, as the volume and duration of gas flows to Egypt increase, Israel gains greater influence over the marginal cost of Egyptian power and LNG exports. This, in turn, allows Israel to impact the timing and quantity of East Mediterranean cargoes reaching Europe.

The stance, in practice

Realistically, this agreement benefits both parties immensely. Egypt secures time and stability for its energy system at a predictable cost, ensuring power for homes and factories, and maintaining LNG export capabilities while addressing its domestic supply issues. Israel transforms its natural resources into lasting influence, gaining revenue for field expansions, strengthening its relationship with a key Arab neighbor, and building a stronger connection to European energy security discussions. While the politics will remain turbulent, the underlying rationale for the deal is clear. For Cairo, it’s a vital lifeline; for Israel, it’s a powerful tool.

Written By: 

*Dr Iqbal Survé

Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN

*Sesona Mdlokovana  

Associate at BRICS+ Consulting Group 

African Specialist

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