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    Chevron pens memo on Egyptian East Med gas exports


The deal means Chevron will reach more export markets with gas from Israel's two largest producers: Leviathan and Tamar. [image credit: Egyptian petroleum ministry]

by: Callum Cyrus

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Natural Gas & LNG News, Africa, Middle East, Liquefied Natural Gas (LNG), Territorial dispute, News By Country, Egypt, United States

Chevron pens memo on Egyptian East Med gas exports

Chevron has entered a memorandum of understanding (MoU) with Egyptian Natural Gas Holding Company on exporting gas from its fields off Israel via Egypt, with the deal potentially covering the development of a floating LNG plant, the national petroleum ministry said June 21.

It follows a "fruitful" bilateral meeting led by Chevron's international president Mike Wirth and Egyptian president Abdel Fattah El Sisi, as well as Egyptian petroleum minister Tarek El Molla. Chevron in 2019 became the operator of two major gas fields offshore Israel, Leviathan and Tamar, after buying out the former owner, Noble Energy.

Under the MoU, gas from both projects could be shipped for consumption in Egypt's domestic market, or else converted into LNG to re-export to other countries.  Leviathan produced around 10bn m3 in 2021, while Tamar yielded a further 8.2bn m3 . The MoU represents the first Israeli export deal for gas since completion of a framework agreement between Israel, the EU and Egypt earlier this month, providing for Israel's gas exports to Europe via Egypt.

Chevron will also use the MoU agreement to support future regional exploration efforts. In September 2022, it will drill a further exploration well at an unnamed East Mediterranean asset.

Egypt was historically a net gas importer but now benefits from spare capacity following a significant investment programme in recent years. Eni's Zohr field, situated 190 km north of Port Said, is Egypt's main gas producer. It yields around 2.7 bn ft3/d of gas and, as of December 2021, contained 706mn barrels of oil equivalent in proved reserves.

Zohr came on stream in 2017, and helped boost Egypt's overall gas output from 48.8bn m3/yr that year, to 58.6bn m3/yr in 2018, and 64.9bn min 2019, according to BP state. But Egyptian gas production slipped by 10.2% to 58.5bn mlast year, amid reports Eni was struggling to maintain Zohr's optimal production environment.

A programme is underway to leverage Eni's Egyptian portfolio more effectively. In April, the Italian major signed an agreement to export more LNG from its upstream portfolio, furthering its efforts to source non-Russian gas flows in light of the Ukraine war. However by broadening its strategy to include other East Mediterranean gas producers, Cairo is likely to significantly strengthen Egypt's position. Currently, Egypt exports around 1.6bn ft3/day. It has two LNG export and liquefaction plants, at Damietta (5.6mn metric tons/year) and Idku (7.2mn mt/yr).

Chevron said:"We look forward to continuing to build our relationship with EGAS and the Egyptian government."