The discovery by Eni of a huge gas field off the Egyptian coast could attract international energy companies that had steered clear of Egypt because of late debt payments and low prices, a leading gas producer in the country said.
The estimated size and quality of the discovery announced by Italy's Eni last week, combined with Egypt's recent efforts to meet overdue debt repayments to foreign companies, will attract interest from far and wide, said Patrick Allman-Ward, CEO of United Arab Emirates (UAE) energy company Dana Gas.
"People in petroleum tend to have a feeding frenzy kind of response to this kind of discovery," Allman-Ward told Reuters. "It will no doubt kick off a lot more interest from international oil companies in Egypt as an exploration destination."
Egypt hopes the field's estimated 30 trillion cubic feet (tcf) of gas will help to ease an energy crisis that has stymied efforts to rebuild an economy battered by political unrest since an uprising toppled Hosni Mubarak in 2011.
Gas production has steadily declined while consumption has risen, but low prices offered by the government and delays in paying arrears have discouraged investment.
Until last week's discovery, Egypt was estimated to have 70 tcf of undiscovered gas. In light of the new field, Allman-Ward believes there will be an upward revision to the estimate for total reserves that have yet to be found.
"That in itself will mean that it will generate a lot of additional interest in the petroleum sector," he said.
In July Egypt raised the prices it pays Eni and Edison for the gas they produce in a move intended to encourage investment in energy.
Egypt's oil minister said in August that its $3.5 billion of debt to foreign oil companies would be repaid by the end of 2016, six months later than an earlier pledge.
An agreement signed in August 2014 allows Dana Gas, which produces about 31,500 barrels of oil equivalent per day in Egypt and relies on the country for more than half of its output, to recover outstanding arrears of $185 million by exporting the government's share of gas, Allman-Ward said.
"What has improved over the past 12-18 months has been the likelihood of the ability of the government to pay," he said. "... This indicates that the investments made by the private sector into the country will get their return."