Two partners in Israel’s Tamar gas field signed a non-binding MoU with an unnamed Egyptian buyer for a potential USD 20 bn contract — which would mark the offshore field’s third long-term supply agreement with Egypt, according to an Israeli stock exchange filing from Israeli producer Isramco and reporting by Mees (pdf). Isramco and Abu Dhabi state-owned Mubadala Energy signed the MoU to supply up to 80 bcm of gas from Tamar between 2031 and 2038, extending automatically through 2043 if Tamar’s production lease is renewed.

The USD 20 bn figure needs unpacking — it isn’t stated outright. Isramco’s filing puts its own take at USD 5.75 bn, the revenue its 28.75% stake would earn if Tamar sells the full 80 bcm. Grossed up across the consortium, that implies roughly USD 20 bn — but only if every Tamar partner signs on. The filing says the full volume would be supplied only if all partners join, so both the contracted volumes and the total value could fall proportionately if some opt out.

Two in, four undecided: The MoU has so far been signed by Isramco and Mubadala Energy (11%), which together hold 39.75% of Tamar. The remaining partners — operator Chevron (25%), Tamar Petroleum (16.75%), Union Energy (14.5%), and Dor Gas (4%) — have not publicly confirmed they will join. Mees reports the buyer is not Blue Ocean Energy, suggesting Tamar’s partners have lined up a different Egyptian counterparty.

The commercial terms: Pricing would remain linked to Brent crude, include a price floor, and retain take-or-pay provisions broadly similar to Tamar’s previous export agreements with Egypt. The proposed agreement implies an average realized price of some USD 7 per MMBtu over its lifetime, Mees said, based on Isramco’s revenue estimates. That’s above the USD 5.5/MMBtu Egypt paid on average for gas imported from Tamar and neighboring Leviathan field.

This would become Tamar’s third long-term gas supply agreement with Egypt: The proposed agreement follows a 25.3 bcm contract signed with Dolphinus in 2018 (which was assigned to state-backed Blue Ocean Energy and amended in 2019), covering deliveries from the second half of 2020, and a further 43 bcm agreement signed in 2024 tied to Tamar’s production expansion and new export infrastructure, including the Nitzana pipeline and expanded Arab Gas Pipeline route via Jordan.

Rather than replacing the existing contracts, the proposed agreement would gradually layer on top of them, Mees reports. Deliveries would begin with relatively modest annual volumes in 2031 while earlier agreements remain in force, before ramping up as those contracts approach expiry.

BACKGROUND- The proposed Tamar agreement comes almost a year after Egypt and the Leviathan consortium amended their existing gas export agreement to secure an additional 130 bcm of gas through 2040 in a USD 35 bn agreement. Earlier this year, Leviathan partners and NewMed Energy said all conditions precedent for that agreement has been satisfied, clearing the way for Chevron and its partners to move ahead with a USD 2.4 bn expansion that will nearly double the field’s production capacity to 21 bcm a year by 2029, and gradually increase exports to reach some 2.1 bcf/d.

Why this matters

This is about more than securing additional gas supplies. Every long-term Israeli gas contract routed through Egypt reinforces Cairo’s strategy of positioning itself as the Eastern Mediterranean’s gas gateway. Rather than building its own liquefaction infrastructure — which would cost up to USD 10 bn — Israel continues to monetize much of its export surplus through Egypt’s existing LNG plants at Idku and Damietta, increasing utilization of infrastructure despite lagging domestic output.

The proposed agreement also would allow the buyer to market gas outside Egypt, unlike existing Blue Ocean contracts, according to Mees’ reporting. That would allow any surplus gas to be redirected through Egypt’s two LNG export terminals for re-export, with Tamar’s partners sharing in any resulting earnings.

A transit hub: Beyond LNG exports, Egypt has sought to use its pipeline network to supply neighboring markets through the Arab Gas Pipeline. Previous gas export agreements to Lebanon and Syria have fueled speculations that some of those volumes could ultimately include Israeli gas once commingled with Egypt’s transmission system.

Local market flexibility: Imported gas can be directed where it generates the highest value — consumed at home to ease supply shortages, liquified for export when margins are attractive, or used to expand energy-intensive industries. The last point is becoming important as fertilizer investments are increasing (check here and here). The country produces roughly 12 mtpa of fertilizer, accounting for over 4% of global production and its one of the key export industries. Securing reliable gas feedstock has become an industrial priority as much as an energy one.

REMEMBER- Israeli imports aren’t without risk: Fields are prone to sudden disruptions on the back of geopolitical escalation in the region leading to the shutdown of exports several times this year, which led to the cutting of supplies to key energy-intensive industries.

OUR TAKE- The bigger picture is one of optionality: Every additional long-term supply agreement expands Egypt’s ability to choose where imported gas ultimately ends up — a flexibility that is increasingly becoming one of Egypt’s biggest competitive advantages. A decade ago, ambitions rested on becoming a major gas producer around Zohr. Today, the strategy is about controlling infrastructure and trade flows instead.

What’s next: The MoU is non-binding and remains subject to Israeli export permits from the appointed Dayan Committee and approvals from the remaining partners. Mees expects the approval of the proposed export agreement to be deferred until after Israel’s October parliamentary elections, with the Knesset dissolved and a caretaker government in office, the MoU will most likely be left for the next administration to handle. The MoU is scheduled to expire after some two months if no binding agreement is signed, though the parties could agree to extend it — a scenario Mees says is the most likely outcome.

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