Brookings: Egypt’s New Gas Discovery: Opportunities and Challenges

After a tough year, the Egyptian government recently received some good news. Italy’s ENI announced that it has discovered the “largest ever” offshore natural gas field in the Mediterranean off the Egyptian coast. Dubbed a “supergiant” field, ENI suggested that the Zohr project would be able to meet Egypt’s own natural gas demands for decades to come.

This is welcome news for the government of Abdel-Fattah el-Sissi as it enters its second year and it is likely to resonate locally and regionally. Once the field comes online it will go a long way toward satisfying local demand, thus allowing Egypt to spend significantly less on energy. It would be prudent for the government to use these savings to improve people’s livelihoods and invest in infrastructure, health, and education.  

From Exporting to Importing: An Unpleasant Journey

In 2003, after the discovery of sizable reserves and the establishment of pipelines and Liquefied Natural Gas (LNG) facilities, Egypt began exporting gas to Jordan, Israel, and Syria. In addition, the government had ambitious plans to export to Lebanon and Turkey.

This coincided with an increased thirst for gas locally. According to a report by the German Marshal Fund, between 2000 and 2012 overall energy consumption in Egypt rose by 5.6 percent, but demand for gas grew by 8.7 percent. By 2012, gas was providing more than 50 percent of the total energy needs of the country compared with 35 percent in 2000. Even though production had risen, nonetheless it was inevitable that in the long run demand would outstrip supply as gas was being used for industrial, commercial, and residential purposes at subsidized prices, as well as exporting. MORE