Israeli Prime Minister Benjamin Netanyahu said on Wednesday that he has approved a USD 35 billion natural gas export agreement with Egypt, the largest gas deal in Israel’s history. The agreement is also expected to help ease strains in bilateral relations following the two-year conflict in the Gaza Strip.

Under the deal, natural gas will be supplied to Egypt over the next 15 years by Chevron, a major stakeholder in Israel’s offshore gas fields in the Mediterranean Sea. Around 50 per cent of the proceeds are expected to accrue to Israel’s state revenues.

In a recorded statement, Netanyahu said the agreement “significantly strengthens Israel’s position as a regional energy power and contributes to stability in our region”. Egypt, which borders both Israel and Gaza, has played a central mediating role between Israel and Hamas ahead of the US-brokered ceasefire reached in October. Cairo has also been among the most vocal critics of Israel’s military campaign in Gaza.

Egypt did not immediately confirm the announcement.

Israeli Energy Minister Eli Cohen, previously a critic of the deal’s terms, appeared alongside Netanyahu during the announcement and said he supported the final agreement. Earlier delays linked to the negotiations had led US Energy Secretary Chris Wright to cancel a planned visit to Israel in October.

Israel discovered significant natural gas reserves off its Mediterranean coast in the early 2000s and began exporting gas nearly a decade ago, initially to Jordan and later to Egypt.

Separately, Israel’s defence ministry said German lawmakers have approved an expansion of a defence agreement for the Arrow 3 missile defence system. The expanded deal raises its value from USD 3.5 billion to USD 6.5 billion, making it the largest defence export contract in Israel’s history. Germany is acquiring the system as part of efforts to strengthen its air defences against Russia.