Eni’s giant discovery could transform Egypt’s gas outlook, according to Wood Mackenzie.
Eni recently announced a giant discovery at its Zohr prospect in offshore Egypt. Estimated to hold 30 trillion cubic feet (tcf) of lean gas, it is one of the most significant global finds of the past decade.
“For Egypt, Zohr’s importance is enormous” said the company’s research note.
“Following a decade of little exploration success and a slowdown in investment, the country began importing LNG in April to meet growing domestic demand.
“We expect LNG imports to reach close to 6 mmtpa next year. However, an additional 2.5-3 bcf/d of gas from Zohr – over 60% of Egypt’s current indigenous supply – will negate the need for long-term imports, with the country entering a period of energy self-sufficiency.
“A moratorium on exports from new discoveries has long been in place and we expect all Zohr gas to supply the domestic market. However, depending on the future policies of the state-owned Egyptian Natural Gas Holding Company (EGAS), it may free up upstream producers with cancelled gas sales agreements to resume exports via the 1.6 bcf/d of idle LNG export capacity.
“Explorers will also be heartened by the discovery. EGAS will have learned from the ‘gas glut’ of the nineties and better stewardship will ensure the continuing prioritisation of the domestic market, while encouraging the development of other finds.
“Longer term, Zohr will provide the government some breathing space as it liberalises the gas sector. But, in the short-term, it could delay the development of costlier, high pressure developments and reduce pricing that operators might otherwise have secured from EGAS.
“Nevertheless, Egypt’s upstream sector is continuing to enjoy a renaissance in 2015 and Zohr looks set to be the crown in a remarkable transformation of fortunes.”
