The government is trying to make up for increases in its energy import bills due to escalating oil and gas prices. It is also finding new sources of supply of gas after some shipments from Qatar, Kuwait, and Saudi Arabia were put on hold when production facilities were hit amid the US-Israeli war against Iran.
Prime Minister Mustafa Madbouli recently said that the conflict had nearly tripled the monthly import bill, sending costs up from $560 million to $1.65 billion.
The timing of new discoveries of natural gas and the announcement of a deal to buy the output of the Cypriot Aphrodite Field could thus not have come at a better time.
Italian energy giant Eni said on 7 April that it had made a significant gas discovery in the Denise W1 exploration well located in the Temsah concession in the Eastern Mediterranean 75 kilometres off Port Said.
While the new well is small in comparison to the Zohr reserves (30 trillion cubic feet), it is still a significant find, with two trillion cubic feet of gas in place and 130 million barrels of associated condensates.
The discovery will help to support Egypt’s goal of boosting gas reserves and increasing production, Eni said in its press release.
The Temsah concession is operated by Eni (50 per cent) in partnership with UK major BP (50 per cent). In July 2025, Egypt agreed with the two companies to renew the concession for 20 years.
One important factor in the new discovery is its economic feasibility as it lies in 95 metres of water depth and less than 10 kilometres from Eni’s existing infrastructure, enabling substantial synergies for fast-track development.
In simpler words, the importance of the Denise W1 discovery is not just about the volume of gas itself, but also about how easily it can be reached. By striking gas just 10 kilometres from Eni’s existing Temsah concession, with all the needed infrastructure, personnel, and equipment already in place, it should be possible to avoid the massive, budget breaking costs that usually come with Mediterranean drilling.
While the shallow waters make drilling less costly, the real win is also in the proximity of the new find to the shore. Instead of spending billions building new platforms and miles of expensive pipelines, the new well can be easily connected to existing infrastructure.
For Egypt, this means a faster route to easing domestic energy shortages, while squeezing every bit of value out of the infrastructure the country has already built.
Eni has long been an active player in Egypt’s gas market as it is the main operator of the Zohr Field. BP has operated in Egypt for more than 63 years. The Denise W1 find marks BP’s second exploration discovery this year, following 12 discoveries in 2025.
Cairo has been offering international oil and gas companies improved terms to encourage them to increase exploration efforts in order to boost output. These include better profit sharing arrangements and the committed repayments of arrears that Cairo said would be completely settled by June.
The country has adopted an ambitious plan to drill 480 wells with a total investment of $5.7 billion by 2030, with this year’s share being 103 wells.
While the new find has led to memories of the optimism surrounding the massive 2015 Zohr discovery, analysts believe that Egypt’s goals have shifted from total self-sufficiency to serving as a regional processing hub for gas.
Only a few days after the Eni discovery, Egypt inked a 15-year agreement to buy the entire output of the Cypriot offshore gas field Aphrodite, according to a disclosure by NewMed Energy, which has a 30 per cent share in the field.
Other operators of the field, which has estimated reserves of 3.7 trillion cubic feet, are Chevron and Shell, with 35 per cent shares each.
The deal grants Egypt the right to buy the entire output of the gas field when it comes online, with an option to extend the deal for an additional five years. The field should start production in about six years.
The Aphrodite partners and Egypt also agreed on a framework to develop a gas transmission system. Cairo and the Aphrodite partners will set up a company under the name of Aphrodite Midstream Co in Egypt to be responsible for the construction, financing, and operation of the pipeline infrastructure required to transport gas from Cyprus to Egypt.
The field’s production capacity is expected to reach about 800 million cubic feet per day at peak operation, with prices linked to global energy benchmarks, including Brent crude, according to the NewMed disclosure.
The deal applies a “take or pay” mechanism, a common contractual clause in the energy sector. It obliges the buyer to pay for a minimum agreed quantity, even if it does not get the gas in return. This ensures the supplier has a stable cash flow and reduces the risk of demand fluctuations.
The deal ensures steady inflows of gas to Egypt to meet rising domestic demand. Cypriot officials told Reuters that the new agreement lays the groundwork for further deals, including potential sales from the Cronos and Aphrodite Fields to Egypt.
In October 2025, Egypt and Cyprus sealed a set of landmark commercial agreements that paved the way for the development of the Cronos Field in Cyprus’s Block 6 and marking a decisive step toward the project’s final investment decision (FID).
Cronos is newer and smaller than Aphrodite, but it is planned to start production and exporting to Egypt in 2027.
By locking in Cypriot gas, Egypt is reinforcing its role as the East Mediterranean’s processing and liquified natural gas (LNG) export hub, leveraging its existing liquefaction plants at Idku and Damietta while giving Cyprus guaranteed market certainty for its long delayed offshore project.
Aphrodite’s development has been delayed for years due to financing and geopolitical hurdles.
However, there are still some challenges. Cyprus’s offshore resources remain contested by Turkey, which could complicate pipeline routes or investment confidence.
Nevertheless, for Cairo, this is a strategic hedge against declining output, while for Nicosia, it is a commercial breakthrough. Together, they reshape East Mediterranean energy flows and bolster Egypt’s LNG hub ambitions.
While the new Mediterranean breakthrough, coupled with the deal, offers hope, its impact will still depend on the speed of production and the duration of regional hostilities.
* A version of this article appears in print in the 16 April, 2026 edition of Al-Ahram Weekly.
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