The Wall Street Journal: Big Oil closer to tapping Mediterranean gas bounty

Big oil companies are pushing into Mediterranean waters off Israel, Lebanon and Egypt after years of U.S. diplomacy helped break open a political logjam around giant Middle Eastern natural-gas discoveries.

Exxon Mobil Corp. XOM, -0.94%  , Royal Dutch Shell PLC RDS.B, -0.81%  , Total SA of TOT, +0.33%  and others are planning to invest in exports and exploration in the Eastern Mediterranean. Their prospects were buoyed by a landmark contract last month between U.S., Israeli and Egyptian firms that breathed new life into the regional market.

Shell is in talks with investors in natural-gas fields off Israel and Cyprus to supply its Egyptian liquefaction facility, according to people familiar with the matter. If the deal advances, it would allow Israel to quickly export some of the extensive reserves of natural gas found in the Mediterranean Sea west of Haifa.

Italy’s Eni SpA ENI, +0.32%   and Total last month announced a new discovery off Cyprus. The two oil giants are also working together to explore in disputed waters off Lebanon. Exxon, too, is set to explore nearby.

A breakthrough occurred in February when Houston energy firm Noble Energy Inc. NBL, -2.27%   and its partners signed a $15 billion agreement to supply gas from two Israeli gas fields—Tamar and Leviathan—to an Egyptian firm. Although Egypt and Israel have had a peace deal for four decades, the idea of depending on Israeli energy exports has long been controversial with the Arab public.

An expanded version of this report appears on WSJ.com.

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