The Israeli company Delek Drilling and American firm Noble Energy are teaming up with the Egyptian gas transportation company East Gas (EGCL) to acquire a 39% stake in the Egyptian company Eastern Mediterranean Gas (EMG), which owns the 90-kilometer-long gas pipeline between Israel and Egypt, Haaretz has learned.

The companies expect to consummate this agreement, which was announced Wednesday night, as well as related deals in early 2019, Noble told investors. EGCL is owned by the Egyptian government.

EMG’s pipeline connects the Israel pipeline network from Ashkelon to the Egyptian pipeline network near El Arish. It has not been functional for several years, following serial terrorist attacks on it when it transported gas from Egypt to Israel.

Even so, Delek, owned by Israeli energy baron Yitzhak Tshuva, Noble, an American company based in Texas, and EGCL are buying the interest in EMG according to a company value of $1.3 billion.

According to Noble’s announcement to investors, this and related agreements aim to support delivery of natural gas from Leviathan and Tamar, two large fields in Israeli territorial waters in the Mediterranean in which Noble owns an interest, to Egypt.

First off, Noble explains in its announcement to investors that it expects to achieve an agreement to re-operate the pipeline (much of which runs offshore). At first the pipeline will be used to transport gas from Tamar – an offshore field in which production has begun – to liquefaction facilities owned by Dolphinus Holdings Limited in Egypt.

When production at Leviathan begins, which is anticipated in late 2019, Noble says it expects to sell at least 350 million cubic feet of natural gas per day, in gross terms, to customers in Egypt. The agreements also constitute a milestone toward Egypt’s goal to become a regional energy hub, Noble executive J. Keith Elliott stated.

The acquisition will be handled through a joint entity between Noble, Delek and EGCL in the Netherlands.

Sigh of relief for Ampal bondholders

The 39% stake in EMG changing hands includes an 8.6% stake owned by the company Ampal American, which is in receivership and used to belong to Yossi Maiman; shares Maiman had held directly through his company Merhav (8.2%); a 12% stake belonging to billionaire Sam Zell; shares held by Israeli institutional investors (8.2%); and shares owned by Egyptian businessman Hussein Salem.

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