Egypt’s giant discovery made by ENI in late August has prompted the Egyptian government to pursue exploration activities off its coast. Suffering from a major energy crisis that has led to severe power outages and a spiking energy bill, the government is determined to work its way towards natural gas independence. Once a net natural gas exporter, Egypt’s rising domestic consumption and the failure of its past decision-makers to properly manage the country’s offshore riches have caused the country to look for suppliers of natural gas.
Egypt’s state gas company EGAS has awarded four new licenses to BP, Edison, a consortium involving BP and ENI´s Egyptian subsidiary and a consortium involving ENI, BP and France´s TOTAL. The field discovered by ENI in the Shorouk Block, 6 kilometers from Cyprus´EEZ, is estimated to hold as much as 30 Tcf of natural gas, enough to ensure the country’s natural gas independence and its re-entry into the export market.
Egypt has been engaged in talks to import gas from neighbouring Israel and Cyprus who have discovered in recent years substantial amounts of hydrocarbon beneath their seabeds. Israel’s Leviathan and Tamar fields are estimated to hold respectively 22 and 10 Tcf of natural gas. Cyprus’ only discovery, the Aphrodite, is estimated at 4.54 Tcf. ENI’s discovery off Egypt’s coast has spurred fears that Cyprus and Israel may no longer be potential suppliers of gas for the Egyptian market. Egyptian officials have however repeatedly announced that Egypt will still look to import gas from the newly emerging natural gas producing countries as an interim solution until it has reached production stage in 2020.
The landscape of the Eastern Mediterranean region is no doubt being reshaped by the new hydrocarbon discoveries. Ties and friendships are forming, albeit in the midst of complications of different natures. Cyprus is struggling to encounter additional amounts of natural gas. ENI’s discovery in Egyptian waters is however encouraging of the Cypriot potential given the proximity of the find to Cypriot waters. ENI, Noble Energy and TOTAL are involved in Cyprus’ EEZ, and while TOTAL has not yet decided to commence drilling, ENI and Noble are committed to further explore the island’s hydrocarbon potential. Israel has been stuck in a policy stalemate with endless domestic debates that may prove pricy. Lebanon, believed to also be home to significant amounts of natural gas, has yet to open its first licensing round if the country manages to put an end to its political vacuum and never-ending rivalries.