JERUSALEM • Israel has struck an "historic" contract to supply natural gas to Egypt, Prime Minister Benjamin Netanyahu announced, in a deal worth US$15 billion (S$20 billion) over 10 years.
"This will bring billions of dollars to state coffers," Mr Netanyahu said on Monday, in a statement announcing the agreement with Israel's western neighbour, which in 1979 became the first Arab country to sign a peace treaty with the Jewish state.
The agreement would "strengthen our economy (and) regional ties", he added.
Israeli energy group Delek Drilling and its associate Noble Energy of the US said they plan to supply around 64 billion cubic metres of natural gas over 10 years to Egypt's Dolphinus from Israel's Tamar and Leviathan reservoirs.
Israeli Energy Minister Yuval Steinitz called it the most significant export deal with Egypt since they signed their peace treaty.
But Egypt's Petroleum Minister Tarek El Molla told the private Egyptian television channel ON E that outstanding rows must be resolved for the deal to go through.
Mr Molla's comments refer to Egypt's challenge to a 2015 ruling by the International Chamber of Commerce ordering Cairo to pay US$2 billion in compensation after a deal to export gas to Israel via pipeline collapsed in 2012 due to months of attacks by insurgents in Egypt's Sinai peninsula.
"We don't mind importing gas from Israel, but we have terms in order (to allow) something like this to happen ... most importantly, the settlement of ongoing arbitration," Mr Molla said.
He added that preliminary approval to import gas from Israel had been given but final permission would be withheld until certain conditions are met including the assurance that any deal would be beneficial to Egypt's economy.
Israel has limited natural resources but in the past few years it has discovered major gas fields off its northern coast and is building the infrastructure to tap the gas.
Tamar, which began production in 2013, has estimated reserves of up to 238 billion cubic metres. Leviathan, discovered in 2010 and set to begin production next year, is estimated to hold 535 billion cubic metres of natural gas, along with 34.1 million barrels of condensate.
The deal with Egypt follows an agreement with Jordan in 2016. Jordan is the only other Arab country to have a peace deal with Israel.
Israel hopes its gas reserves will give the country energy independence and the prospect of becoming a supplier for Europe as well as forging strategic ties in the region.
Egypt, for its part, is trying to leverage the discovery of the giant Zohr field to attract investment and foreign currency.
Egypt has idle liquefaction plants such as Shell's, making it a suitable location for a regional hub.
"This paves the way for further deals and cements Egypt as a regional energy hub," Mr Yossi Abu, Delek Drilling's chief executive officer, said in a phone interview.
"This will be an engine for both the Egyptian and Israeli economies alike. We're proud to be part of this moment."
Israeli gas companies' shares rose the most in nine years on Monday.
AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS
