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

Why It Matters

The long‑term supply pact secures a stable domestic gas source for Israel’s power sector while bolstering NewMed’s earnings and reinforcing Leviathan’s role as a regional energy hub.

Key Takeaways

• 20‑year gas supply deal up to 1.7 BCM annually for Dalia plants
• Two 850 MW combined‑cycle plants slated for Ashdod and Tzafit
• NewMed projects $6.7 billion revenue, $5 billion its share
• Phase 1B aims to lift Leviathan output to ~21 BCM by 2029
• Leviathan currently serves Israel, Egypt, Jordan, selling 10.8 BCM last year

Pulse Analysis

The new supply agreement underscores Israel’s strategic shift toward domestically sourced natural gas for electricity generation. By locking in up to 1.7 billion cubic meters annually, Dalia Energy can diversify away from imported fuels and lock in predictable pricing, a critical factor for large‑scale combined‑cycle plants that demand reliable feedstock. The partnership also highlights Chevron’s indirect involvement through its 39.66% stake in Leviathan, while NewMed, the dominant local partner, captures the bulk of the commercial upside.

Leviathan’s Phase 1B expansion is a cornerstone of the region’s energy outlook. The $2.36 billion final investment decision will add roughly 21 BCM of gas capacity, positioning the field to meet growing demand in Israel and sustain export commitments to Egypt and Jordan. The increased output dovetails with recent infrastructure upgrades, including a third pipeline to the production platform, which lifted field capacity to about 14 BCM. This growth trajectory not only secures revenue streams for NewMed—projected at $6.7 billion over the contract’s life—but also reinforces the Mediterranean basin’s status as a burgeoning gas corridor.

For investors and policymakers, the deal signals confidence in the long‑term viability of offshore gas assets amid a global transition to cleaner energy. While renewable penetration accelerates, natural gas remains a bridge fuel, and Leviathan’s reliable supply can support grid stability as Israel integrates more intermittent renewables. Moreover, the contract’s timing—starting in 2034—aligns with anticipated regional power demand spikes, ensuring that the infrastructure and financing commitments made today will translate into tangible economic and energy security benefits over the next decade.