Massive Egyptian Gas Field Scheduled for Development in January
Italian Eni announced after the meeting of its CEO Claudio Descalzi with Egypt’s President Abdel Fattah el-Sisi in Cairo on Thursday 26th November that the company will commence the development of the Zohr field in January. Eni announced the giant discovery in Egyptian waters at the end of August. The field, located in the Shorouk Block of Egypt’s Exclusive Economic Zone in close vicinity to Cypriot waters, is estimated to hold up to 30 trillion cubic feet (tcf) of natural gas.
The field is expected to provide a substantial solution to Egypt’s energy troubles as the country is facing major natural gas shortages due to its growing domestic demand, a flat production, and its export obligations. Despite Egypt’s plans to fast-track the development of its indigenous resources, the country is still looking to import natural gas from Israel and Cyprus via a subsea pipeline.
Earlier this week, a Letter of Intent (LoI) was signed between the Leviathan partners and Dolphinus Holdings Limited for the export of 4 BCM (billion cubic metres) of natural gas per annum for a period of 10 to 15 years from the Leviathan field to Egypt’s domestic market via the existing gas pipeline operated by East Mediterranean Gas Limited.
Cyprus is also eyeing the Egyptian market as a destination for its newly found natural gas. Cyprus’ only discovery to date, the Aphrodite field, is estimated to hold 4.54 Tcf of natural gas, most of which will be allocated for export given the island’s modest need for the hydrocarbon. The Zohr discovery was a boost for Cyprus as the island preps for more exploratory activities off its coast by Eni, who has failed to date to encounter recoverable amounts of natural gas in Cyprus, Total, whose presence in Cypriot waters has been hesitant, and Noble Energy who recently welcomed BG amongst the Aphrodite partners.
It remains unclear whether Cyprus and Israel will opt for a joint effort to export their new riches to Egypt and from Egypt to far-reaching markets using Egypt’s underused LNG facilities. Tension has been rising between Cyprus and Israel as Israel recently claimed that part of the Aphrodite field belongs to Israel.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat