Israel’s hopes of becoming a natural gas export powerhouse have sustained a blow from an enormous discovery of gas off the coast of Egypt. 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.Italy’s Eni announced the discovery Aug. 30. It said it had found the gas equivalent of 5.5 billion barrels of oil in a field called Zohr. 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.
The industry regards a field of 1 billion barrels as a supergiant, making Zohr a considerable bonanza for Egypt. Eni said the gas could satisfy all of Egypt’s natural gas demand for a decade.
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. That accord may stand because the LNG isn’t intended for the Egyptian market. 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.
In any case, the Eni find is certain to undercut any chance that Noble and Delek can export gas to Egypt itself. 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.
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. But Israeli politicians have stalled Leviathan with demands that Noble and Delek reduce their stake in the field—although the Knesset currently is considering a cabinet proposal that would allow development to go ahead, with exports starting in the 2020s.
Yuval Steinitz, Israel’s energy minister, has lashed out at his political colleagues for stalling Leviathan. 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.”