Eni Confirms Zohr Starts Producing

Italian Eni has now confirmed that output has started at the 30 trillion ft³ Zohr gasfield in deep water 190 km offshore Egypt, taking a record quick time to move from discovery to first gas.

Egypt's oil ministry said that output had begun at the weekend and was expected to reach 1bn ft³/d in June 2018 and to increase further to 2.7bn ft³/d in late 2019.

Eni discovered the field – the largest yet in the Mediterranean – in August 2015 and obtained investment authorisation after just six months in February 2016. Shortly after that it sold down its stake, first to the UK major BP and then to Russian Rosneft. CEO Claudio Descalzi said December 20 that Zohr would "completely transform Egypt’s energy landscape, allowing it to become self-sufficient and to turn from an importer of natural gas into a future exporter."

The discovery, in the Shorouk Block, is one of Eni’s seven record-breaking projects, which have involved rapid development and production, and is testament to the success of Eni’s dual exploration model, adopted in 2013. The approach is to allow Eni to benefit from early monetisation thanks to the sale of minority stakes, while maintaining operatorship of the asset. It said: "By parallelising exploration, appraisal and development phases, the time-to market is quicker, equity development cost are lowered, and Eni achieves an accelerated cash flow. This winning combination allowed Eni to generate $9bn from its exploration activities between 2014 and 2017."

Descalzi said the result was testament to the company's "unique know-how, our ability to innovate in technology and our tenacity in pursuing even the most challenging goals, of which we are very proud." He also thanked the Egyptian authorities, all the partners for their all-important contributions and the whole Egyptian petroleum sector which provided full support to achieve Zohr project in a record time. Eni now holds a 60% stake in Shorouk Block, Rosneft 30% and BP 10%; the latter two have options to increase their stakes each by 5%, but Eni will retain at least 50%.

BP CEO Bob Dudley said Zohr was also an important strategic milestone for BP, marking the completion of one of the biggest development programmes we have ever delivered in a single year. 

The UK major's North Africa president Hesham Mekawi said: “The development of Zohr in a record time has brought a new critical source of energy to the Egyptian market. BP’s two other current major projects in Egypt – Atoll and the second phase of the West Nile Delta project – will bring further new gas resources into production. Together these projects will play an important role in supporting and reshaping Egypt's energy sector.” 

Timing of first gas from Zohr was also critical for BP, which had been expecting seven major projects to start up this year, with Zohr bringing up the rear after Khazzan in Oman, Persephone in Australia, Juniper and the Onshore Compression project in Trinidad, Quad 204 in the UK, and the first phase of the West Nile Delta project, also in Egypt. These will contribute towards the company's target of an extra 800,000 barrels of oil equivalent per day from new projects by 2020. 

Eni is co-operator of the Zohr project through Petrobel, jointly held by Eni and the state corporation Egyptian General Petroleum Corporation (EGPC), on behalf of Petroshorouk, jointly held by Eni and the state company Egyptian Natural Gas holding Company.