Italy’s Eni announces huge gas find off Egypt’s coast

Steinitz: Discovery is a ‘painful reminder’ that Israel is lagging behind.

By REUTERS
August 30, 2015 21:36
3 minute read.
Israel's natural gas

Israel's natural gas. (photo credit: MINISTRY OF NATIONAL INFRASTRUCTURES)

Italian energy group Eni said on Sunday it had discovered the largest known gas field in the Mediterranean off the Egyptian coast, predicting the find could help meet Egypt’s gas needs for decades to come.

The offshore “Zohr” field could hold 30 trillion cubic feet (849 billion cubic meters) of gas, covering an area of about 100 square kilometers, according to a statement from the Italian firm. If the estimates are correct, the Zohr gas field would be significantly larger than Israel’s biggest field Leviathan, which is approximately 621 b.cu.m.

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“Zohr is the largest gas discovery ever made in Egypt and in the Mediterranean Sea and could become one of the world’s largest natural-gas finds,” the statement from Eni said, adding that the company had full concession rights to the area.

The find follows other significant gas discoveries in the Mediterranean in recent years, including in Israel. This is expected to have a major impact on the region’s economy and potentially offer Europe new supply options, allowing it to lessen its dependence on Russian gas imports.

In response to Eni’s announcement, National Infrastructure, Energy and Water Minister Yuval Steinitz stressed the need to urgently approve Israel’s natural gas compromise outline, to end the freeze that has overtaken the sector at home. Although the cabinet approved the document in question two weeks ago, numerous bureaucratic and regulatory hurdles are still preventing the outline from receiving final authorization. As a result, development has yet to begin on Israel’s Leviathan gas reservoir. “Following the reports, the discovery of the huge gas field in Egypt is a painful reminder that while the State of Israel is standing still and taking its time with the final approval of the gas outline, and delaying further exploration, the world is changing before our eyes, also with ramifications on export possibilities,” Steinitz said. “We must approve the gas outline and advance the Israeli gas sector.”

Some such export opportunities involved potentially conveying gas from Israel to Egypt. Last year, the natural gas companies operating in Israel’s waters signed letters of intent for the provision of 71 b.cu.m. of Tamar reservoir gas to Spanish Union Fenosa’s Egyptian liquefied natural gas plant and the supply of 105 b.cu.m. of Leviathan gas to the British Gas LNG plant, also in Egypt.

While Steinitz reacted with urgency regarding to the Eni’s announcement about the Egyptian gas field, MK Shelly Yacimovich (Zionist Union), who has been particularly vocal against Israel’s gas companies and the government’s actions, said that the discoveries prove that advancing Israel’s gas outline is not an issue of national security. “It turns out that Egypt does not need our gas, and the government must now require the creation of a logical and sane outline, without fictitious panic and imaginary security explanations,” Yacimovich said. Although some Israeli officials may view the likely discovery at Zohr as a threat to Israel, the finds represent a major boost for Egypt, where power cuts caused by gas and oil shortages have often fueled unrest.

Eni said the discovery was located at a depth of 1,450 meters, adding that it planned to fast track development of the site, using existing infrastructure. It said yet more gas might be uncovered in future drilling.

Eni, 30 percent controlled by the Italian state, is the biggest foreign oil and gas producer in Africa, where it has significant operations in war-riven Libya. In 2011 it made huge finds in offshore Mozambique, with an estimated 85 trillion cubic feet of gas in place.

It has operated for more than 60 years in Egypt and is one of the main energy producers in the country, with a daily output of 200,000 barrels of oil equivalent.

In June, it signed an energy exploration deal with Egypt worth $2 billion, allowing Eni to explore in Sinai, the Gulf of Suez, the Mediterranean and areas in the Nile Delta.

In July, Egypt raised the prices it pays Eni for the natural gas it produces.

“This historic discovery will be able to transform the energy scenario of Egypt,” said Eni CEO Claudio Descalzi, who met Egyptian President Abdel Fattah al-Sisi on Saturday to discuss the find.

Egypt, which once exported gas to Israel and elsewhere, has become a net energy importer over the last few years.

Under Sisi, Egypt’s state-owned gas company EGAS has increasingly rationed gas supplies to much of the domestic industry, which has at times crippled production and hampered the economic recovery.

The government has also attempted to improve the energy situation by slashing state energy subsidies, paying down its debt to foreign energy firms, and negotiating import agreements.


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