Isramco and Mubadala Plan $20 Billion Gas Export Deal from Tamar to Egypt

Isramco and Mubadala, two partners in the Tamar gas field, have signed a preliminary memorandum of understanding to export gas to Egypt in what would be Tamar's largest export deal to date. If all Tamar partners join, the export value could reach $20 billion. The deal requires export approval from Israel's Ministry of Energy. Recently, the ministry delayed a larger $35 billion Leviathan gas export deal to Egypt, allowing it only after commitments to supply cheaper gas domestically.

According to Isramco's stock exchange announcement, subject to a binding agreement and necessary approvals, including export permits, the sellers (Isramco and any other Tamar partners who join) will supply up to 80 billion cubic meters (BCM) of gas to the buyer. The contract will be on a Take or Pay basis, linked to Brent crude prices, with a price around $7 per million British thermal units (MMBtu), slightly lower than Leviathan's $7.35 per MMBtu. Both prices are significantly higher than Israel's domestic gas price of about $4.5 per MMBtu but much lower than Egypt's alternative sources at approximately $15 per MMBtu.

Gas deliveries are planned to start in 2031, coinciding with the completion of export pipelines such as the one at Nitzana currently under construction. Isramco and Mubadala currently hold nearly 40% of Tamar and are the only partners committed to the deal so far. Isramco's share is valued at $5.75 billion. Other partners, including Chevron, Tamar Petroleum, and holdings of businessman Aharon Frenkel, have yet to join and are considering their options. Frenkel joined Tamar partly to increase export potential, making the deal attractive.

Market sources note the memorandum is an early step; Tamar previously signed a similar memorandum with the Israel Electric Corporation, which collapsed over price disputes and is now in arbitration in London. Tamar partners say gas sales to both the electric company and Egypt are possible, depending on pricing and alternatives.

In the larger Leviathan deal, Energy Minister Eli Cohen conditioned export approval on Leviathan's commitment to supply cheaper gas domestically, a condition already implemented with a $6.7 billion gas agreement with Dalia Power Station. It remains unclear if the Ministry of Energy will require a similar commitment from Tamar for export approval.