Eni’s credentials boosted by giant gas find in Egypt

31 Aug 2015 | Author: | No comments yet »

A gigantic natural gas discovery in Egypt means Israel has to find another customer for its gas.

ENI, which is 30% owned by the Italian state, has full exploitation rights, and says it will fast-track the field’s development. Egyptian stocks jumped the most in the world on Monday as investors speculated an offshore natural gas discovery would end a domestic supply shortage and earn the country billions of dollars in export revenues.

A “supergiant” fuel subject holding the equal of 5.5bn barrels of oil has been found off the coast of Egypt, the most important ever discover within the Mediterranean.Italy’s Eni has discovered gas reserves of up to 30 trillion cubic feet in the Zohr prospect in Egypt’s Mediterranean, making it the biggest gas discovery ever in Egypt, the Egyptian petroleum ministry said on Sunday. “Zohr is the largest gas discovery ever made in Egypt and in the Mediterranean Sea and could become one of the world’s largest natural-gas finds,” Eni said in a statement.

Milan – Italy’s Eni is open to selling a stake in its “supergiant” Zohr gas field discovery off Egypt, its chief executive said, as the state-controlled energy company looks for funds to bankroll development without sacrificing dividends. Companies drilling in Israel have planned to ship much of their product to Egypt, which, if its gas find is as large as thought, will not need the Israeli supplies. Italian oil group Eni, which , stated the discover was sufficient to provide Egypt with fuel for many years, in a serious increase to the nation’s struggling financial system.

Eni stated it might fast-track the event of the invention to start manufacturing as quickly as attainable. “This historic discovery will be capable of rework the power state of affairs of Egypt through which we now have been welcomed for over 60 years,” stated Claudio Descalzi, Eni’s chief government. During Egypt’s economic development conference in March the company signed heads of agreement with the Egyptian government worth $5 billion over a period of 4-5 years. It has already sold part of its gas discovery in Mozambique and is seeking to sell another 15 percent. “It’s an open door to give value and solidity to Eni’s balance sheet,” Descalzi said in an interview published on Monday by Italian newspaper La Repubblica. “But it will not be a necessary outcome.

That’s 46 percent of the North African country’s current reserves and may translate into $48 billion of revenue for the government after Eni’s share is accounted for, according to a report by EFG-Hermes Holding SAE, Egypt’s biggest investment bank. Egypt has been experiencing an energy crunch since the summer of 2008, but the energy sector took a blow following the 2011 uprising as arrears to foreign oil firms accumulated and production slowed. Once an energy exporter, declining oil and gas production and increasing consumption has forced Egypt to divert energy supplies to the domestic market, turning it into a net importer. Gas shortages have become more pronounced in the country since the 2011 Arab Spring, forcing the government to cut supplies to factories and implement rolling power outages. The country garnered some $40 billion in energy deals during the development conference held in March as part of the government’s plans to boost an economy battered by more than four years of political upheaval.

Last year, Noble Energy and Delek Energy, the two companies developing Leviathan, cut a $30 billion deal to ship gas to an Egyptian liquefied natural gas plant for onward export. Italy is one of Egypt’s largest trading partners with $6 billion worth of mutual trading value in the 2013/2014 fiscal year, Egyptian central bank data shows. Industrial companies, which have suffered from gas supply shortages, will be prompted to revive expansion plans within the next year, and “we expect foreign direct investment, whether green field or acquisitions, to recover sharply in sync,” he said.

On the other hand, gas- and oil-producing countries often are reluctant to be transshipment points for neighboring nations, because the fuel competes with their own product. Now Noble and Delek must either hope for greater demand from Jordan and the Palestinian territories, or that they can resurrect longshot plans to ship the gas through Turkey or Greece.

Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. In a statement obtained by the Wall Street Journal, Steinitz said the Eni find “is a painful reminder that while Israel sleepwalks and dallies with the final approval for the gas road map, and delays further prospecting, the world is changing in front of us, including ramifications for export options.”

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