UPDATE 1-Eni open to selling stake in supergiant Egypt gas find

31 Aug 2015 | Author: | No comments yet »

‘Supergiant’ natural gas field found off Egypt in the Mediterranean Sea.

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. Energy shares plummeted on the Tel Aviv Stock Exchange on Monday after the Italian energy group Eni said it had discovered the largest known natural gas field in the Mediterranean off Egypt, casting doubt about Israeli gas exports to the country.In this Saturday, Aug. 29, 2015 photo provided by Egypt’s state news agency MEAN, Eni CEO Claudio Descalzi, third left, and his delegation meet with Egyptian President Abdel-Fattah el-Sissi, center, and an Egyptian delegation, in Cairo, Egypt. The stock exchange’s Oil and Gas index was down 7.6% to 1,010.13 points in late morning trading, with Avner down 11.5% at 2.39 shekels (61 cents), Delek Drilling off 11.4% to 12.54 and Ratio, down 14.8% to 29 agrorot, all in very heavy trading. Zohr could hold a potential 30 trillion cubic feet of lean gas in place (5.5 billion barrels of oil equivalent in place) covering an area of about 100 square kilometres.

On Monday, Claudio Descalzi, CEO of Eni, told CNBC: “It is changing the game for Egypt…It is very important for Egypt, but also for the Mediterranean in terms of stability.” Descalzi could not give a timeline for when the gas might hit the market, but said developments would be quick as the gas field was in close proximity to Eni’s processing facilities. “It is close to the facilities so the time to market will be very good… that is part of our strategy to…continue to do our exploration in the mature area where we have a deep geographical knowledge and we can take advantage of our facilities and that will make the unit cost in terms of capital very positive,” the CEO said. “I don’t want to put a date now but it is a question of a few years to have production—then a full production, that will be a very quick fast track development,” Descalzi added. 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. They have been negotiating long-term contracts to sell gas to customers in Egypt, but the deals have been held up by the policy debate in Israel over how the industry should be regulated.

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. Egypt’s petroleum ministry confirmed the discovery in a separate statement. “Egypt has still great potential,” Claudio Descalzi, the company’s chief executive officer, said in the statement. “This historic discovery” will transform the energy industry in Egypt, he said. In July, Egypt and Eni signed an update to the head of agreement reached in March, following the discovery of gas reserves of up to 15 billion cubic metres in Egypt’s Nile Delta region.

In June, it signed an energy exploration deal with Egypt’s oil ministry worth $2 billion following an memorandum of understanding signed in March during an investment conference, allowing the Italian major to explore in Sinai, the Gulf of Suez, the Mediterranean and areas in the Nile Delta. 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. Egypt’s energy demand is rising as the Arab world’s largest population grows, making the country more reliant on imports provided by Persian Gulf states. 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.

The latest discovery will contribute to Egyptian supply for decades, Eni said. “A find of this size should be enough to cover a lot of Egypt’s energy gap,” Robin Mills, a Dubai-based analyst at Manaar Energy Consulting, said by phone Sunday. “They’ll likely have to meet domestic needs first, before any export plans are discussed. Earlier this year, the Italian firm cut its dividend and said it would cut investments by 17 percent in the 2015 to 2018 period. “Gas has a big future because of the environmental constraints. 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. This will also put a damper on Israeli plans to export gas to Egypt.” Eni will likely sell most of the fuel into Egypt’s domestic market, said a spokesman, asking not to be identified citing company policy. European shares fell on Monday, with Germany’s DAX and France’s CAC on track for their worst month in four years, plagued by sliding Chinese stocks and the threat of a U.S. rate increase as early as next month.

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. The Rome-based company already produces gas in Egypt and is a partner in a venture operating a gas liquefaction terminal at Damietta on the Mediterranean coast.

Here you can write a commentary on the recording "UPDATE 1-Eni open to selling stake in supergiant Egypt gas find".

* Required fields
Twitter-news
Our partners
Follow us
Contact us
Our contacts

About this site