Massive Gas Find a Boon for Egypt, Salve for Energy Crisis

31 Aug 2015 | Author: | No comments yet »

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

The “largest ever” offshore pure fuel area within the Mediterranean has been found inside Egypt’s territorial waters, in response to the Italian power big Eni.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. The invention, introduced by the corporate on Sunday and confirmed by Egypt’s oil ministry, might maintain a possible 850 billion cubic metres of lean fuel in an space of about 100 sq. kilometres. 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. The “supergiant” area – probably one of many world’s largest pure fuel finds – is situated at a depth of 1,450 metres within the Shorouk Block, the corporate stated.

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. If validated by further drilling, Zohr would overshadow Israel’s 3.9-billion-barrel Leviathan field, which until now has been the largest natural gas field discovery in the Mediterranean. Eni stated it’ll “instantly appraise the sector with the goal of accelerating a fast-track improvement of the invention,” giving a timeframe of 4 years.

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. Israeli Power Minister Yuval Steinitz stated on Sunday that the discovery might have implications for Israel, which has been trying to export its personal deposits.

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. Companions Noble Power and Delek Group, who in recent times found two sizeable fields in Israeli waters, have been negotiating long-term contracts to promote fuel to clients in Egypt, however the offers have been held up by regulatory uncertainty in Israel. 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. The gas find means “downside risks to the valuation of Egyptian equities have materially subsided,” Hany Genena, the chief economist and equity strategist at Cairo-based Pharos Holding, said in an e-mailed report. Steinitz and Prime Minister Benjamin Netanyahu have been struggling to get approval of an settlement they reached with Noble and Delek that might assist velocity up improvement of a lot of the nation’s offshore reserves. “The enormous fuel subject discovery in Egypt is a painful reminder that whereas Israel has been ‘sleep strolling’ and delaying the ultimate approval of the fuel define and holding up additional exploration, the world is altering in entrance of our eyes, together with the implications on export prospects,” Steinitz stated in a press release.

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. It also is a blow to Israel, which, after decades of watching its Middle East neighbors getting rich from their oil, has been on the cusp of earning petro-dollars itself, with plans to start exports in 2018.

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