Eni hopes for second Egypt gas bonanza
With production from the vast Zohr offshore gasfield rising fast, Eni is to start exploring another potential play
The discovery of Zohr in 2015, with at least 30 trillion cubic feet of natural gas in place, changed the complexion of Egypt's energy sector. The field was brought on stream at record speed, and production from the offshore giant is helping to transform the country's gas profile. Output is set to reach 2.7bn cubic feet a day by 2020.
Not so long ago, nothing like this seemed possible. In the political and economic chaos created by the 2011 popular uprising and toppling of the country's president, Egypt was forced to divert supplies away from its two liquefied natural gas plants, at Idku and Damietta, to meet the demands of the domestic market. Exports stopped, and Egypt even became an importer of LNG.
Now the authorities say they've just issued their last LNG tender, and by the end of this year there'll be no more imports. At some point in early 2019, the LNG plants will be back in operation, with exports resuming.
Zohr is by no means Egypt's sole success story. International firms, attracted by a generous gas sale price and the ease of connecting to well-tried infrastructure, are working frenetically to bring more onshore and offshore fields on stream. Eni, Shell, Edison and BP are among the IOCs to announce plans to expand activities. Not surprising, considering there's estimated to be between 50 trillion and 150 trillion cf of gas yet to be discovered.
Eni is hoping that a good proportion of that so-far elusive gas will be in the Noor field off North Sinai. The Egyptian cabinet in March approved exploration plans, and Eni is to start preliminary drilling this summer. Only then will it become clear whether rumours that Noor holds even larger gas deposits than Zohr are true or false.
Recent developments in Egypt's energy sector—including the liberalisation of the country's entire gas market—have been so dramatic that it would be unwise to dismiss out of hand any guesses about what the future might hold.
Egypt certainly looks on course to becoming the main gas hub for the Eastern Mediterranean, with two LNG facilities already in place. The chances of Israeli and Cypriot gas ending up in Egypt—rather than taking the longer and more expensive route to Europe—are increasing.