Chevron Eyes Leviathan Expansion; Israel Delays Gas Export Permit to Egypt

Chevron is nearing a final investment decision to expand Israel’s Leviathan gas field, but exports to Egypt remain on hold pending government approval. The $35 billion deal with Blue Ocean would send 130 Bcm of gas via new pipelines through 2040.

(Reuters) — Chevron is nearing a final investment decision for an expansion of the Leviathan gas field off Israel's Mediterranean coast, but is still waiting for an Israeli permit to export the gas to Egypt, it said on Nov. 5.

Chevron and its partners in the field, NewMed and Ratio, in August signed the largest export agreement in Israel's history with Egyptian firm Blue Ocean, worth up to $35 billion, to supply gas to Egypt mainly via new pipelines.

But Israel's Energy Minister Eli Cohen has refused to approve the gas export agreement to Egypt until a "fair price" for Leviathan's gas for the Israeli market is agreed upon.

"We confirm that we are nearing a Final Investment Decision for potential capacity expansion of the Leviathan reservoir," Chevron said in an emailed statement.

"We will continue working with all stakeholders to create the conditions that will encourage the investments necessary to ensure that Israel and the region have the affordable energy," it said.

U.S. Pressure on Israel Over Export Permit

Cohen's office on Friday said that U.S. Energy Secretary Chris Wright cancelled his planned visit to Israel over the issue.

"The U.S. administration has applied significant pressure on officials in Israel ... in order to approve the $35-billion gas export agreement with Egypt," Cohen's ministry said. "Since the negotiations have not yet been completed, Minister Cohen refused to approve the export until the issue is resolved."

Cohen and Wright are scheduled to attend an energy summit in Athens on Thursday to discuss plans for infrastructure to link the "East to Europe via the Gulf and Israel," Cohen's Ministry said on Nov. 5.

U.S. Interior Secretary Doug Burgum, Greece's Energy Minister Stavros Papastavrou and Cypriot Energy Minister Giorgos Papanastasiou are also expected to take part, the Israeli Ministry said.

Neither the Israeli nor the Egyptian energy ministries immediately responded to a request for comment on the status of the export permit.

Export Deal Would Ease Egypt Energy Crisis

The export deal would ease an energy crisis in Egypt, which has spent billions of dollars on importing liquefied natural gas since its own supplies fell short of demand.

Under the expansion, Leviathan, which has reserves of some 600 billion cubic meters, will sell about 130 Bcm of gas to Egypt through 2040, or until all of the contract quantities are fulfilled.

Leviathan's expansion, which would cost around $2.4 billion, should allow for production and supplies to Israel and its neighbors through 2064, NewMed said in August.

Chevron holds 40% of Leviathan and is the field's operator. Tel Aviv-listed NewMed holds around 45% of the project, and Ratio 15%.