Israel’s decision to suspend a key amendment to its gas export deal with Egypt in September stemmed from its demand for a $3 premium per million British thermal units (MMBtu) above current pricing, according to a senior source at Egypt's petroleum ministry familiar with the matter.
The source, who requested anonymity due to the sensitivity of the negotiations, told Al Manassa that the Israeli side believes the existing price—linked to Brent crude and currently at $7.70 per MMBtu—is significantly below what it pays to import liquefied natural gas (LNG). This costs nearly $12 per MMBtu on the spot market.
In August, the two countries announced a revision to the 2019 agreement, committing to boost total Israeli gas exports to Egypt to 130 billion cubic meters through 2040 in a deal worth $35 billion. But a month later, Israeli Prime Minister Benjamin Netanyahu halted the implementation, citing Cairo’s alleged violation of the Camp David Accords by deploying military units near the border.
Israeli pricing demand adds strain
Israel is now pressing to raise the gas price by $3 per MMBtu—a nearly 40% increase—according to the Egyptian petroleum ministry source. “The Israeli side argues this would bring parity with global LNG prices,” the person said. “But that’s not a fair comparison.”
The source added that LNG imports carry additional costs such as liquefaction, shipping, and regasification, while pipeline-delivered gas between Egypt and Israel incurs significantly lower logistics costs. “Comparing LNG to pipeline gas ignores core economic differences,” they told Al Manassa.
The revised 2019 contract maintained Brent-based pricing, with minor adjustments for future phases, the source added.
No alternatives for Israel
The source dismissed Israel’s suspension of the deal as a pressure tactic. “They’re treating the gas approval like a bargaining chip, but the reality is they don’t have viable export alternatives,” the person said, pointing to Egypt’s two LNG export terminals in Idku and Damietta.
“Without Egypt, Israel cannot monetize its gas at scale,” the source said.
US pressure mounts, but Israel resists
A statement from Israeli Energy Minister Eli Cohen’s office recently acknowledged US pressure to finalize the deal but insisted that “Israeli interests are secured and a fair price for the Israeli market is agreed upon.” According to The Washington Post, Cohen’s refusal to sign prompted the cancellation of a scheduled visit by US Energy Secretary Chris Wright.
Despite the freeze, Egypt remains committed to the amended agreement. “We consider the revised deal economically viable for both sides,” the petroleum ministry source said. They expressed confidence the dispute would be resolved in the coming days.
