An Italian drilling company made a major natural gas discovery off Egypt’s coast that could throw a wrench into Middle Eastern energy diplomacy.
Italian energy company Eni began exploration in the region over the summer, taking a $60 million dollar gamble that appears to have paid off in spades. Eni discovered what’s been dubbed a “supergiant” natural gas field that’s estimated to be worth $100 billion. It could be the largest natural gas find ever in the Mediterranean, and is one of the largest recently discovered in the world, according to the New York Times.
Since the overthrow of Hosni Mubarak, Egypt has wrestled with political unrest and a lagging economy. In recent years an energy shortage has also harmed the country which must rely heavily on imports. The gas field, named Zohr, could become a major natural gas site within the next three years and turn Egypt into an energy exporter, the Times reports.
The discovery, “has created a big opportunity,” said Eni chief executive Claudio Descalzi. “We can make a big eastern Mediterranean hub.”
Eni is currently in discussion with the Egyptian Natural Gas Holding Company (EGAS) to fast track linking the new find to Egypt’s power grid. Daily News Egypt reports that Eni plans to have the site ready for production within three years, and will have 20 different wells for extraction. The company also hinted at the possibility of discovering another natural gas well as it drills deeper into the field.
Egypt’s good news could be bad for Israel however. Israel is self-sufficient in natural gas due to the discovery of Tamar in 2009, a small field off their cost. In 2010 however, American company Noble Energy discovered the much more massive Leviathan gas field. According to The New York Times, the site was supposed to be developed so Israel could export natural gas to Egypt and Jordan, partly as an effort to cultivate relations between the neighboring countries.
Anti-trust concerns in Israel have mired the project in bureaucracy however, and with the new discovery in Egypt their market demand may be significantly diminished. Israeli energy minister Yuval Steinitz said in a September address to parliament that, “If we continue to procrastinate, it is possible there will no longer be a need for Israeli gas in Egypt and Jordan.”
For Egypt the discovery means a bright new future in the industry as the Zohr field helps them become more energy independent, reports The New York Times. Martijn Murphy, an energy consultant at Wood Mackenzie said, “Egypt has undergone a remarkable transformation of fortunes. It looks like it has got its energy policy back on track.”
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