(Bloomberg) -- The companies developing Israel’s largest natural gas fields agreed to increase supply to their Egyptian customer as part of a landmark contract to help meet growing demand in the most populous Arab country.
Partners in the Leviathan and Tamar offshore reservoirs, led by Israel’s Delek Group Ltd. and the Texas-based Noble Energy Inc., will send 85.3 billion cubic meters of natural gas to Egypt’s Dolphinus Holdings Ltd. over 15 years, according to a Tel Aviv Stock Exchange filing on Wednesday. That’s nearly 35% more than what was agreed on in 2018, when both sides signed a 10-year deal valued at $15 billion.
Delek expects revenue from the contract to grow in proportion to the increase in supply.
The Israeli gas will start flowing to Egypt at the beginning of next year, with the aim to gradually reach an annual capacity of almost 7 billion cubic meters from both pools by the summer of 2022. The parties further amended the original contract to remove any fluctuations in the amount of fuel to be delivered to Egypt.
The deal is set to strengthen economic ties between the two countries and give Israel a new export market for the gas it discovered in the eastern Mediterranean.
Domestic demand in Egypt for natural gas will steadily rise about 30% over the next two decades, causing supply shortage within five years, according to Wood Mackenzie, a U.K.-based energy research and consultancy firm.
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