Backers of Israel’s massive Leviathan natural gas field signed a $10 billion deal on Monday to supply 1.6 trillion feet (tcf) of gas to Jordan’s National Electric Power Company.
The deal marks a significant step forward in Israel’s efforts to exploit its offshore gas reserves, although it is still looking for a partnership with Egypt or Turkey, or both, which would give it far more export volume and the possibility of linking up with markets in Europe.
“Subject to regulatory approvals from Israel and Jordan, sales … are anticipated to commence,” said Texas-based Noble Energy, the project’s operator.
Talks on the contract began more than two years ago.
The 15-year deal for Leviathan, which holds an estimated 22 tcf of gas, should help the U.S.-Israeli group secure funds to bring it online.
Production is expected to begin around 2019 or 2020.
Prime Minister Binyamin Netanyahu has often played up Israel’s potential as an economic partner with Sunni Arab countries in the region.
In that respect, the deal with Jordan represents a breakthrough. While Israel and Jordan signed a peace deal in 1994, relations are not always good, but as economic ties deepen, Israel hopes they will become firmer.
The Leviathan group has also been in talks to export much more gas to companies in Egypt, and there have been contacts with Turkey, Cyprus and Greece on potential cooperation, either for the export or trans-shipment of gas.
Shares in the Israeli partners – which include Ratio Oil, Delek Group and its subsidiaries Avner Oil and Delek Drilling – rose around 5 percent on the Tel Aviv Stock Exchange following the announcement.
Leviathan, discovered in the eastern Mediterranean in 2010, is one of the world’s largest offshore gas discoveries of the past decade. Egypt has also made large offshore finds in the past year, boosting expectations for East Mediterranean gas.
Last year, Israel approved plans for a 9.6-mile pipeline near the Dead Sea to export gas to Jordan.