Companies leading Israeli gas development buy $518m stake in firm which controls only pipeline running between Israel and Egypt
The EMG pipeline seen here, running between Ashkelon and Al-Arish (MEE)
The companies leading the development of Israel's offshore gas reserves have announced a deal that lifts one of the last major obstacles holding up the exportation of Israeli natural gas to Egypt.
Noble Energy and its Israeli partner Delek, along with Egyptian East Gas Company, bought a 39 percent stake in East Mediterranean Gas (EMG), the company which controls the only pipeline running between Israel and Egypt.
Announced on Thursday, the purchase totals $518m, with Noble and Delek paying $185m each and the rest paid for by Egyptian East Gas, according to documents filed by Delek with the Tel Aviv Stock Exchange.
With control of the pipeline, Delek said that gas from Israel's Tamar and Leviathan reservoirs could be transported to Egypt as early as next year, the start of the 10-year, $15bn deal signed in February between Delek, Noble and the private Egyptian company Dolphinus Holdings.
“This is the most significant milestone for the Israeli gas market since the discoveries," Delek CEO Yossi Abu said in a statement.
"The Leviathan reservoir is becoming the Mediterranean Basin's primary energy anchor, with customers in Israel, Egypt and Jordan."
An Israeli victory
The deal is a major win for the Israeli gas industry which, as a result of both political and economic challenges, has struggled to sell its discoveries.
The first field - Tamar - was found in 2009, followed in 2010 by Leviathan, one of the largest global discoveries this century.
But nearly a decade later, only Tamar produces gas for commercial consumption, supplying nearly all of Israel's gas and also exporting to Jordan's state-owned Arab Potash Company and its affiliate, Jordan Bromine Company.
As time has passed, the list of potential customers in the Mediterranean has shortened as Egypt and Cyprus have made major gas discoveries of their own.