INTERVIEW: Eni’s natural gas discovery in Egypt 'a gift from heaven'

Randa Ali , Monday 31 Aug 2015

Energy expert Mohamed El-Ansary told Ahram Online that 'real industrial development is now possible for Egypt after Eni's discovery of 30 trillion cubic feet of natural gas'

(Photo courtesy of Eni's official website)

Eni's massive natural gas discovery in Egypt will provide enough much-needed power to achieve real industrial development, prominent energy expert Mohamed El-Ansary told Ahram Online.

Italy's Eni has discovered gas reserves of up to 30 trillion cubic feet in Egypt’s offshore Zohr prospect, making it the largest gas discovery ever in the country and in the Mediterranean Sea, the company announced on Sunday.
The new discovery will provide a third of Egypt's natural gas reserves, according to petroleum ministry spokesman Hamdi Abdel-Aziz. Current gas reserves stand at 65 trillion cubic feet. 
The breakthrough could also lead to other discoveries in Egypt, helping the country to reach self-sufficiency in less than five years, according to the government official.
Eni also said that the find will satisfy Egypt’s natural gas demand for decades.
For Egypt, which has been facing severe power cuts and natural gas shortage, the timing of the discovery couldn’t have been better, says El-Ansary, a former senior executive at Shell International with experience in Europe, Russia and the Far East and currently chief executive of Tri-Ocean Energy, an Egyptian-based oil and gas company.

El-Ansary described the discovery as "a gift from heaven because of its incredibly opportune time and geographic location".
“After the Sharm El-Sheikh economic conference [in March] a lot of new power stations were contracted by the government, approximately 70% of which will depend on natural gas to operate … we didn’t know how we would supply all these new power stations and meet the demands of the existing and new factories, which are needed for industrial development,” he said.
Egypt has suffered from increasingly frequent power cuts in past years, which have not only hit households but also seriously limited the production capacity of energy-intensive industries such as fertilizers, steel and cement.
“Our hands were tied, in order to provide gas for electricity [for households and commercial] we had to stop factories,” he said.
In spite of unbearably hot weather, Egypt significantly witnessed less power cuts this summer compared to before, when blackouts were more frequent.
“That came at the expense of the majority of factories that heavily rely on natural gas. They were either closed or are producing with 10% of their need for gas,” said El-Ansary.
“Now we will have sufficient natural gas to supply power/electricity plants and for a true industrial development, new factories, lower unemployment, the economic cycle will really begin to move,” he added.
The well 'Zohr' is located in the economic waters of Egypt’s Mediterranean, at a depth of 4,757 feet (1,450 metres), according to Eni.
The discovery was made in the Shorouk block that was awarded to Eni in January 2014 following an international bid.
In the past few years, Egypt has turned from a net exporter of natural gas to a net importer on the back of rising consumption and falling productions.
The country's total natural gas exports have declined by an annual average of almost 30% from 2010 to 2013, as a result of swiftly rising domestic demand on natural gas, which increased by an annual average of 7% between 2004 and 2013, according to a report by the US Energy Information Administration (EIA).
To seek a way out of the energy shortage, the government allowed companies in 2014 to import gas independently using the government's network for the first time in order to address energy shortages that limit their production.
However, El-Ansary stressed the need to limit exporting, even in the presence of sufficient reserves.
“Highly-populated countries with industries - a true state, not a city-state like Qatar, for example - are advised to use every drop of natural gas in the country to support the social and economic growth of the nation,” he said, adding that, ideally, "exporting should be a minor portion of the country’s total production, around 10% for example."
The location of the discovery is another favorable factor of this gigantic discovery. The new find is located roughly 200 KM away from Eni’s Temsah, one of Egypt’s biggest gas production platforms located about 60 KM from Port Said.
"Their [Eni] Temsah Concession Area has pipelines dedicated just for this platform, but as we speak now, the field of Temsah has finished most of its reserves/production, meaning that the platform and pipeline now have perhaps around 70% of free capacity,” he said.

"Most probably a Subsea completion process will take place, where wells are completed on the sea floor using underwater wellheads, and connected to Temsah by a new inter-connecting pipeline."
The location, described by El-Ansary as “brilliant” will allow Egypt to produce the find within three years or less.
Eni has been present in Egypt since 1954 through its subsidiary IEOC, a company that has always been a frontrunner in exploring and extracting gas resources in Egypt since the discovery of the Abu Maadi Field in 1967.
According to the company's official website, Eni is the main hydrocarbon producer in Egypt, with a daily equity production of 200,000 barrels of oil equivalent. 
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