Why is Chevron excluded from this specific Leviathan gas supply agreement?

Joint operating agreements in oil and gas often permit individual equity partners to independently market or take in kind their share of production rather than selling jointly. In this instance, Israeli partners NewMed Energy and Ratio Energies chose to directly contract their equity gas volumes with Dalia Power Energies to optimize their domestic commercial portfolios.

How will this agreement affect Israel's electricity generation sector?

The 20-year commitment guarantees a steady, reliable natural gas supply of up to 1.3 bcm annually to Dalia Power Energies, supporting the continuous operation of private combined-cycle plants. This long-term fuel security aids Israel's strategy to fully phase out coal-fired power and rely on gas-fired generation alongside expanding renewables.

Does this contract limit the Leviathan consortium's ability to export natural gas?

No, because the contracted volume of approximately 1.3 bcm per year is manageable within the field's current 12 bcm annual capacity and aligns with planned expansion projects. Leviathan's partners continue to prioritize expanding total reservoir capacity to 21 bcm per year, which will support both expanded domestic demand and high-volume regional exports to Egypt.

Rigzone · May 25, 2026 (May 25) · 1 min read

Chevron's Leviathan Partners to Supply Gas to Dalia Power Plants in Israel

Chevron Corporation

Isometric technical illustration of offshore oil and gas operations with drillship and support vessel — Illustration: Chevron Corporation

Analysis

AI-assisted analysis · reviewed by Yuri Kan

Israeli partners in the offshore Leviathan natural gas field have finalized a major 20-year sales agreement with Dalia Power Energies to supply up to roughly 1.3 billion cubic meters (bcm) of gas annually. Notably, field operator Chevron is not a direct party to this specific supply contract, reflecting a commercial carve-out structure among the field's concession holders. This deal strengthens long-term domestic gas monetization in Israel while reinforcing the commercial baseline needed for planned capacity expansions at Leviathan.

Key Facts

Partners in Israel's Leviathan gas field, excluding Chevron, have signed a 20-year gas supply contract with Dalia Power Energies.
The supply agreement covers initial natural gas volumes of up to approximately 1.3 billion cubic meters (bcm) per year.
The Leviathan field is operated by Chevron Mediterranean Limited with a 39.66% stake, alongside Israeli partners NewMed Energy (45.34%) and Ratio Energies (15%).
Dalia Power Energies is one of the largest private electricity producers in Israel, operating the Dalia combined-cycle power station at Tzafit and expanding its generation fleet.
The contract allows the domestic Israeli partners to independently market portions of their equity gas entitlement under standard joint operating agreement flexibility.
Leviathan holds an estimated 22.9 trillion cubic feet (tcf) of recoverable gas and currently produces around 12 bcm annually for domestic and regional export markets.

Background & Context

The deepwater Leviathan field commenced commercial production in December 2019 and serves as the primary pillar of Israel's domestic energy mix alongside major export contracts to Egypt and Jordan. Following Chevron's acquisition of Noble Energy in 2020, the partnership has evaluated multiple expansion phases, including boosting production to 14 bcm and eventually 21 bcm annually. Long-term power purchase and fuel supply contracts with private Israeli Independent Power Producers (IPPs) like Dalia have historically underpinned the financial and commercial justification for field infrastructure investments.

Market Impact

This transaction provides strong, long-term revenue visibility for NewMed Energy and Ratio Energies while locking in baseload fuel requirements for Dalia's expanding power generation portfolio. The carve-out of Chevron indicates that joint venture partners are exercising individual marketing rights to capture domestic off-take terms suited to their specific commercial strategies. For the Israeli domestic market, committing additional domestic gas reserves over a 20-year horizon enhances grid stability and supports the transition away from coal-fired generation. Furthermore, locking in firm domestic contracts reduces commercial risk as the consortium advances capital expenditure decisions for Leviathan Phase 1B expansion.

What to Watch

Market participants will monitor the progress of final investment decisions (FID) regarding the Leviathan debottlenecking and expansion projects aimed at increasing total output toward 21 bcm. Observers will also track regulatory approvals from Israel's Natural Gas Authority and antitrust regulators regarding individual partner gas sales. Additionally, the execution of this contract may influence how remaining uncontracted Leviathan gas is balanced between future domestic demand and regional export pipelines to Egypt.

Why This Matters for Cyprus

While directly focused on the Israeli domestic market, Leviathan's supply allocation directly impacts export availability and pipeline integration across the wider East Mediterranean energy corridor. Developments in Leviathan's commercial structure influence broader regional infrastructure strategies, including prospective synergies with Cyprus's Aphrodite field, in which Chevron and NewMed are also joint venture partners.

Frequently Asked Questions

Why is Chevron excluded from this specific Leviathan gas supply agreement?: Joint operating agreements in oil and gas often permit individual equity partners to independently market or take in kind their share of production rather than selling jointly. In this instance, Israeli partners NewMed Energy and Ratio Energies chose to directly contract their equity gas volumes with Dalia Power Energies to optimize their domestic commercial portfolios.
How will this agreement affect Israel's electricity generation sector?: The 20-year commitment guarantees a steady, reliable natural gas supply of up to 1.3 bcm annually to Dalia Power Energies, supporting the continuous operation of private combined-cycle plants. This long-term fuel security aids Israel's strategy to fully phase out coal-fired power and rely on gas-fired generation alongside expanding renewables.
Does this contract limit the Leviathan consortium's ability to export natural gas?: No, because the contracted volume of approximately 1.3 bcm per year is manageable within the field's current 12 bcm annual capacity and aligns with planned expansion projects. Leviathan's partners continue to prioritize expanding total reservoir capacity to 21 bcm per year, which will support both expanded domestic demand and high-volume regional exports to Egypt.

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