Israel and Egypt are close to a compromise that would sweep away a major obstacle to a multibillion-dollar natural gas deal for export of Israeli offshore gas to Egypt, reported Bloomberg. Negotiations are still underway.

According to Times of Israel, reported move would push along stalled talks over energy imports, amid steadily warming ties between the two countries.

Latest reports cited two people familiar with the negotiations, Israel may be willing to agree to settle for 50% of the $1.73b fine that Egypt was ordered to pay as a result of an international arbitration.

Israel has painted gas exports to Egypt and other nations in the region as a strategic imperative in an area rocked by strife, and removing this obstacle would be crucial to the export deals it seeks to clinch and to cement ties with its closest ally in the Muslim world.

In addition, energy-strapped Egypt needs fuel until it develops its own newly discovered fields, and it can use an idle gas pipeline there to transfer Israeli fuel for export to third countries.

In December, deals between Egyptian and Israeli companies had been cancelled following an arbitration court ruling ordering Cairo to pay compensation for damages caused by violating a supply contract. Subsequently, Egypt ordered its oil and gas authorities to freeze negotiations until the dispute over the arbitration was resolved.

Before 2012, Israel imported natural gas from Egypt though the pipeline, running through the restive Sinai Peninsula, until it was dogged by frequent sabotage.

Meanwhile, Israel is expected to finally ratify a deal to put a major offshore gas field online, the energy ministry announced, after a compromise was reached with the US-led consortium of developers, Middle East Online reported.

Further, Israel is reported to have been boosting its naval capabilities to use new sea-borne missile defense to guard its gas fields, wrote Reuters.