UPDATE 2-Italy’s Eni makes mega gas discovery off Egyptian coast

31 Aug 2015 | Author: | No comments yet »

‘Supergiant’ gas field discovered in Mediterranean.

Italian energy group Eni said on Sunday it had discovered potentially one of the world’s largest natural-gas fields off the Egyptian coast, predicting the find could help meet Egypt’s gas needs for decades to come. “According to the well and geophysical data available, the field could hold a potential of 30 trillion cubic feet of lean gas in place,” Eni said in a statement. ROME (AP) — The Italian energy company Eni SpA announced Sunday it has discovered a “supergiant” natural gas field off Egypt, describing it as the “largest-ever” found in the Mediterranean Sea. Italian oil group Eni, which announced the discovery on Sunday, said the find was enough to supply Egypt with gas for decades, in a major boost to the country’s struggling economy.

He added that the government expects to reach “self-sufficiency” within five years with the help of Eni’s discovery, in addition to more expected findings. Eni said it would fast-track the development of the discovery to begin production as soon as possible. “This historic discovery will be able to transform the energy scenario of Egypt in which we have been welcomed for over 60 years,” said Claudio Descalzi, Eni’s chief executive. Egypt has turned into a net importer of natural gas from a net exporter in the past few years on the back of rising consumption and falling productions. In June, it signed an energy exploration deal with Egypt’s oil ministry worth $2 billion following an MOU 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. He said “important synergies with the existing infrastructures can be exploited, allowing us a fast production startup.” Eni has been in Egypt since 1954 through its subsidiary IEOC.

The company had been forecasting that it would find 2 billion barrels of oil equivalent over the next four years and in the seven years to 2014 had found 10 billion barrels, less than double the Egyptian find. The country’s energy sector, already experiencing an energy crunch since the summer of 2008, took a blow following the 2011 uprising as arrears to foreign oil firms accumulated and production slowed. “Egypt can rely on this discovery for the next decade. The company will use existing facilities, including offshore platforms, near the new find to keep the development costs relatively low, Eni Chief Executive Claudio Descalzi said in an interview. A subsea well also will be used to limit costs. “This is a confirmation of our strategy of developing conventional assets in mature areas where we have strong geological knowledge and where we have synergies,” said Mr. 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.

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. 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.

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. Eni, through an Egyptian subsidiary, has complete control of the exploration and will have a 50% stake in the production with the rest held by the Egyptian state oil and gas company.

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