By Toyin Akinosho, Publisher
With ENI’s discovery of what the company describes as a “supergiant” pool of gas in the Mediterranean, Egypt is looking forward to clawing back its gas exporter status.Ten years ago, the country commissioned the first of two 3.6Million Tonnes Per Annum Liquefied Natural Gas (LNG) trains, hoping to be a significant player in the global supply of gas.
By 2015, delivery of cargoes from either train had altogether stopped. Decline in natural gas output had colluded with geometric increase in domestic gas demand to force North Africa’s largest economy into importation of natural gas.
When ENI announced a discovery of gas in the onshore West Abu Madi development lease in July 2015, the estimated reserves of half a trillion cubic feet was greeted with subdued applause, even when the Italian giant assured that the molecules would get to the market in a record three months.
But the discovery of Zohr on the Sharouk Block in the last week of August 2015 has compelled attention of the global gas market, as ENI claims the latest find might hold 30Tcf of lean gas in place in an area covering 100km2.
The market immediately punished investors developing the neighbouring large gas field in Israel, as ENI announced the new trophy. Avner and Delek, two of the main participants in the 22Tcf Leviathan gas field in the Israeli part of the Mediterranean, lost 14% and 16% respectively of their shares the day after the Zohr announcement.
It was no help to the two companies that development of the Leviathan had stalled, while the investment climate for gas development in Egypt had improved considerably in the last one year, with the government paying up debts and increasing tariffs to more than $5 per 1000cubic feet for gas supply into the national grid.
The Zohr 1X NFW discovery well was drilled to a total depth of 4,130 metres in1,450 metres of water on the Shorouk Block 9. The well hit a 630 metre hydrocarbon column in a carbonate sequence of Miocene age with 400metres of net pay, ENI explained.
The company has future plans to target a deeper Cretaceous upside with a dedicated well. The Sharouk Block is on Egypt’s offshore boundary, and is in close proximity to Cyprus’ Block 12 containing the Aphrodite discovery and Isreal’s Leviathan discovery.
ENI, through its subsidiary IEOC Production BV, holds a 100% working interest in the Sharouk Block and is operator.
Great news for Egypt!
It’s also very interesting to see the regional implications of ENI’s find, especially as it concerns Israel.
Should Egypt decide to jump again into the LNG export space, I see another level of competition for Nigerian LNG for the European market. I can imagine what Babs Omotayo and his team will be thinking right now.
The article mentions $5 as the domestic gas price to the Egyptian grid – is this the commodity gas price or the end-consumer price? If it is the commodity gas price, It’d be interesting to know what end-customer gas prices are like in Egypt – just to enable us compare with the Nigerian situation.