State-run Israel Electric Corp. (IEC) has chosen the Leviathan gas field off Israel's Mediterranean coast for a short-term natural gas supply deal, saying it would lower its costs by up to $175 million.
Leviathan will supply about 4 billion cubic meters of gas once production begins this October until June 2021, although IEC said in a statement there was no minimum purchase requirement.
The deal with Leviathan, which is subject to various approvals, will apply to gas quantities that exceed its minimum it is obligated to buy from the Tamar gas field.
It noted that it has been working to reduce its fuel costs as well as electricity rates and the new deal will save an estimated $145 million to $175 million.
Gas supply after 2021 will come from the Karish field—owned by Energean—once that field comes online.
Leviathan, discovered in 2010 about 120 km (75 miles) off Israel's coast, is one of the world's largest gas discoveries of the past decade. The project operator, Texas-based Noble Energy , owns a 39.66% stake. Delek Drilling holds 45.34% . The nearby Tamar gas field began producing in 2013.
Egypt expects investments of at least $750 million to $800 million in the first stage of exploration in the 12 concessions, Petroleum Minister Tarek El Molla said during a press conference.
Country plans to award up to $1.8 billion in contracts by September.
Under a deal with the government the 70-km (44-mile) pipe will have capacity for 950 million cubic feet of gas per day from fields operated by Noble and will be ready in first-quarter 2021.