Wood Mackenzie: Eni’s discovery to transform Egypt’s gas outlook

Eni’s recent giant gas discovery at its Zohr prospect has an enormous importance for Egypt, Wood Mackenzie says.

Estimated to hold 30 trillion cubic feet (tcf) of lean gas, it is one of the most significant global finds of the past decade, according to Wood Mackenzie.

Following a decade of little exploration success and a slowdown in investment, the country began importing LNG in April to meet growing domestic demand.

Wood Mackenzie expects LNG imports to reach close to 6 mmtpa next year. However, an additional 2.5-3 bcf/d of gas from Zohr – over 60% of Egypt’s current indigenous supply – will negate the need for long-term imports, with the country entering a period of energy self-sufficiency.

A moratorium on exports from new discoveries has long been in place and Wood Mackenzie expects all Zohr gas to supply the domestic market. However, depending on the future policies of the state-owned Egyptian Natural Gas Holding Company (EGAS), it may free up upstream producers with cancelled gas sales agreements to resume exports via the 1.6 bcf/d of idle LNG export capacity.

Wood Mackenzie believes EGAS will have learned from the ‘gas glut’ of the nineties expecting better stewardship and prioritisation of the domestic market, while encouraging the development of other finds.

Longer term, Zohr will provide the government some breathing space as it liberalises the gas sector. But, in the short-term, it could delay the development of costlier, high-pressure developments and reduce pricing that operators might otherwise have secured from EGAS.

Nevertheless, Wood Mackenzie says Egypt’s upstream sector is continuing to enjoy a renaissance in 2015 and Zohr looks set to be the crown in a remarkable transformation of fortunes.

Image: Wood Mackenzie