• Natural Gas News

    [Premium] E Med Fields 'Will Benefit from Zohr'

Summary

A former deputy at Egypt's foreign ministry sees Zohr as providing the impetus to develop other fields in the eastern Mediterranean as long as there is outside help.

by: Sara Vargas

Posted in:

Natural Gas and LNG News, Africa, Premium, Corporate, Exploration & Production, Investments, Political, Ministries, Intergovernmental agreements, News By Country, Egypt

[Premium] E Med Fields 'Will Benefit from Zohr'

Commercial and political issues have hindered natural gas development in the Mediterranean, but recent large gas discoveries, gas deals and political co-operation between Israel, Egypt and the European Union could signal a new turn for the region, argued Magdy Rady, a former assistant to the foreign minister of Egypt, at the Brussels Energy Club (BrEC) March 12.

After the Arab Spring in 2011, Egypt went from being a net exporter of gas to becoming a net importer, as production fell from 61.4bn m³ in 2011 to 41.8bn m³ in 2016. This decline in production combined rising demand limits Egypt's ambitions to become the regional gas hub.

However, several significant gas reserves have been discovered in the Mediterranean sea in the past decade, including Tamar and Leviathan (Israel), Aphrodite (Cyprus), and the biggest to date, Egypt's offshore Zohr field, operated by Eni, which discovered it. The think-tank European Council on Foreign Relations (ECFR), quoted by Rady, argues that in theory, “Egypt is the only country in the region that could export gas to Europe independently, because of the size of its reserves and its existing export infrastructure.”

This view was echoed by Eni's vice-president for government affairs Fabio Marchett, who said: “Zohr gives a purpose to all other smaller fields around because the needed infrastructure is already in place in Port Said (Egypt). Instead of trying to come up with new big projects, we can connect smaller fields to Zohr,” he said.

Although Zohr will be used to cover Egyptian demand for the time being, future excess and the gas coming from other smaller fields in the region can account for 8-10bn m³/yr in extra capacity in the short term, a figure that increases proportionally to the political stability in the area.

Rady claims that priorities have shifted since the previous regime, and that Egypt is now working on transparency, co-operation with its neighbours and energy efficiency, in order to build a long-term sustainable approach to both its own energy system and geopolitical stability in the region.

Although tensions seemed on the rise this month, he argues that recent agreements with Israel and Cyprus to supply gas to Egypt suggest on the contrary that creating a gas hub that would benefit everybody is possible.

However, the EU has to step in “to orchestrate the whole affair,” adds Rady, as it would be the major client for Mediterranean natural gas. It needs to communicate its needs clearly to all players in the region and to provide regulatory experience and know-how. Both Marchetti and Rady are enthusiastic about what seems like a step in the right direction, as energy commissioner Miguel Arias Canete is set to visit Egypt on April 24 after what they called a “chill” in relations, and follow with a visit to Israel.