Chevron Corp. (NYSE:CVX) has signed a deal with Israel Natural Gas Lines, Israel’s state-owned pipeline operator, to begin construction of the Nitzana natural gas pipeline that will transport natural gas from the giant Leviathan Gas Field to Egypt. Scheduled to be completed in three years, the $610 million pipeline is expected to ease Egypt’s ongoing energy crisis, which currently spends billions of dollars every year importing liquefied natural gas (LNG) to meet surging domestic energy demand. The Nitzana pipeline will transport ~600 million cubic feet of natural gas per day, bringing Israel's total export capacity to Egypt to more than 2.2 billion cubic feet per day. Israel’s NewMed is Leviathan's main operator with a 45.3% working interest; Chevron has a 39.7% working interest, while Ratio Energies. (TASE: RATI) has 15%. Founded in 1992, Ratio Energy is one of Israel's leading energy partnerships, with a mission to develop and produce natural gas and oil.
Egypt's natural gas production has declined rapidly over the years due to the natural depletion of mature fields, including the Zohr gas field. Coupled with a lack of significant new discoveries since 2015, surging domestic demand for electricity, and past financial issues such as hard currency shortages and payment arrears to foreign companies, Egypt now finds itself in a tenuous position, becoming a net gas importer since 2022, and relying on imported Liquefied Natural Gas (LNG) as well as pipeline gas from Israel. Last year, Egypt imported a record 981 million cubic feet per day of natural gas from Israel, good for 18.2% year-over-year increase. Egypt imports up to 20% of its gas from Israel.
Last month, Egyptian Prime Minister Mostafa Madbouly announced that the $35-billion gas supply agreement signed with Israel’s NewMed Energy was extended until 2040. But the fate of these gas flows now hangs in the balance, with tensions in the Middle East escalating after the Israeli military ordered residents of Gaza City to evacuate.
Last month, Netanyahu declared that he is "deeply committed to the vision of Greater Israel,’’ encompassing parts of Arab countries stretching from the Euphrates to the Nile. According to Israel Hayom, Netanyahu has instructed officials "not to move forward with the massive gas deal with Egypt without his personal approval.”
On its part, Chevron is now moving on three major geopolitical fronts at once: finalizing terms for the Nitzana pipeline to ship Israeli gas into Egypt, bidding for offshore blocks near Crete that Libya claims as its own and preparing a long-delayed final investment decision (FID) on the Leviathan expansion. Together, the moves put the U.S. major at the center of the East Mediterranean’s most combustible mix of energy ambition and maritime dispute. Chevron has partnered with Greece’s HelleniQ Energy to bid for exploration rights in offshore blocks south of Crete and the Peloponnese. Athens views this development as a major step towards asserting its sovereignty over the contested waters. Waters south of Crete and the Peloponnese are contested due to a 2019 Turkey-Libya maritime agreement that ignores Greece's Exclusive Economic Zone (EEZ) claims and is a response to potential hydrocarbon reserves in the area. Greece claims these areas based on international law, while Turkey disputes that islands like Crete can generate EEZs and views the situation as a geopolitical power struggle. Libya also claims significant portions of the area, aligning with Turkey's position.
Meanwhile, Chevron has long delayed a final investment decision (FID) on the Leviathan expansion due to security concerns and a need for greater market demand, particularly after the October 2023 conflict. However, Chevron and its partners, NewMed Energy and Ratio Energies, now expect to take the FID on the Leviathan Phase 1B expansion, which includes drilling, subsea systems, and a potential floating liquefied natural gas (FLNG) facility, in the fourth quarter of 2025. This expansion is projected to significantly increase the field's annual production capacity and is supported by a recent historic gas export deal, a revised development plan approved by Israel in August 2025, and ongoing contract negotiations with potential customers.
Discovered in 2010, the Leviathan is located approximately 130 km off the shores of Haifa. The 330-square kilometer field holds ~22.9 trillion cubic feet of recoverable gas, making it the largest natural gas reservoir in the Mediterranean, and one of the largest producing assets in the region. Production is facilitated by 4 subsea wells that are connected to an offshore platform via a subsea manifold and two 120 km long pipelines, where all processing of gas takes place. The gas is then piped to shore into the Israeli national grid and distributed to clients in Israel, Egypt, and Jordan.
By Alex Kimani for Oilprice.com
