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Editorial: New global energy players

Editorial , Friday 2 Aug 2019
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Energy ministers from East Mediterranean countries meeting in Cairo last week for the second time this year reiterated their intention to create a strong organisation of natural gas producers. Egypt, Israel, Cyprus, Greece, Italy, Jordan and the Palestinian Authority, founding members of the East Mediterranean Gas Forum (EMGF), affirmed their “commitment to elevate the forum to the level of an international organisation that fully respects the rights of members in their natural resources in accordance with international law”, the final communique of the meeting said.

The EMGF will promote regional cooperation in the field of energy, in line with international law, to exploit the region’s resources and provide a viable regional gas market, stated the communique. 

Egypt, Greece and Cyprus agreed in October 2018 to establish an East Mediterranean Gas Forum. The forum is intended to include among its members all countries that produce and import East Mediterranean gas, and transit countries.

The forum, headquartered in Cairo, will also seek to make the most of existing infrastructure and work on developing it further to facilitate the exploitation of future gas discoveries. Member states also stressed the importance of consultations with the private sector and their quest to benefit from its experience in the field.

The forum, which was also attended as observers by US Energy Secretary Rick Perry, European Commissioner for Energy Miguel Arias Canete and representatives from the World Bank and France, is shaping up to be a new global energy player amidst continuous voluminous gas discoveries in the region.

Among those is Egypt’s Zohr gas field, the largest gas discovery ever made in Egypt and in the Mediterranean Sea and expected to satisfy a significant part of Egypt’s natural gas demand for decades to come. So far, production from Zohr has enabled Egypt to cut costly imports and to make plans to export. In September 2018, Egypt stopped importing liquefied gas from abroad. Today, Zohr is now producing two billion cubic feet per day, equivalent to approximately 365,000 barrels of oil per day. 

The establishment of the EMGF is of utmost importance in preserving the rights of producing countries in the region, especially with Turkey pursuing plans to drill for gas in Cypriot waters, creating grounds for tension.

Egypt has an important role to play in this economic bloc, not only as a producer but as a potential regional energy hub, particularly with plans that gas produced in the region will be processed in Egypt before being exported. 

Among the goals of the forum set out in January was to support members who have gas reserves and who are current gas producers, to capitalise on their existing and future reserves by enhancing their cooperation with the parties of consumption and transit in the region, and developing further infrastructure to accommodate current and future discoveries.

Egypt signed an agreement in September 2018 with Cyprus to connect Aphrodite gas field to its liquefaction plants in Idku and Damietta, whereby Cypriot gas would reach Egypt via a marine pipeline to be liquefied and re-exported. Also $15 billion worth of gas from Israel’s Tamar and Leviathan fields will also be processed in Egypt as part of a 10-year deal between the Israeli Delek Drilling Company and the Egyptian Dolphinus holding company.

Egypt’s strategic location and an infrastructure including refineries, liquefaction plants and petrochemical factories, poises it to become an important trading and distribution centre for natural gas. This is a boost to Egypt’s international standing amidst a growing reliance on natural gas, especially from Europe. EU gas demand is estimated to range at around 400 billion cubic metres per year. Currently Russia and Norway are the leading suppliers to the EU.

 *This editorial appears in print in the 31 July, 2019 edition of Al-Ahram Weekly under the headline: New global energy players

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