Supergiant gas field Zohr officially begins production: Eni

Ahram Online , Wednesday 20 Dec 2017

Italian oil and gas company Eni has announced the official start of production from Egypt's massive Zohr gas field, less than two-and-a-half years after discovery

gas field Zohr (Photo:
Gas field Zohr (Photo:

Italian oil and gas company Eni said on Wednesday that it had begun producing gas from Egypt's giant offshore gas field Zohr, the Mediterranean's largest ever gas discovery.

The mammoth gas field began production in record time, less than two-and-a-half years since its discovery in 2015, with potential gas reserves of 850bn m3, the company said on its website.

Once Zohr has reached full production, it will transform Egypt from a net importer to a net exporter of natural gas, helping the country achieve its aim of becoming a regional energy hub.

Experimental production from Zohr began last Saturday at an initial 350 million cubic feet per day (mcf/d), with gas transported from the field to the refinery in Port Said.

Zohr is a deepwater offshore gas field located in the 3,752km² Shorouk block in the Mediterranean Sea, 150km from the north coast of Egypt. It was discovered by Eni in August 2015. In February of the following year, the Egyptian Natural Gas Holding Company (EGAS) granted Eni approval for the Zohr Development Lease.

In February 2017, BP acquired a 10 percent stake in Zohr from Eni subisidary IEOC Production for $375 million. Eni now holds a 60 percent stake in the Shorouk offshore concession, BP 10 percent, and Rosneft 30 percent, an acquisition the latter signed in October.

Zohr is being developed and operated by Belayim Petroleum Company (Petrobel), a joint venture between Eni subsidiary IEOC and the Egyptian General Petroleum Corporation (EGPC).

The first phase of the project is set to be completed by mid-2018, by which time production will have gradually increased to 1 bcf/d. It is set to reach 2.7 bcf/d by the end of 2019.

Investments in the field are estimated to be at least $12 billion in the first and second stages, petroleum ministry spokesperson Hamdy Abdel-Aziz told Ahram Online.

Egypt as regional energy hub

Egypt's petroleum ministry has made clear its plans to turn the country into a regional hub for energy trading, a vision that Zohr will help to realise. With the surge in domestic production from Zohr, Egypt will be able to fulfill its own industrial needs, at which point the petroleum ministry says it will authorise the export of gas.

In five years' time, Egypt will allow oil companies to export gas that is not needed locally , Petroleum Minister El Molla told Reuters on Monday.

In November, El Molla said that once Egypt has fulfilled it commitments for liquified natural gas (LNG) imports, it plans to completely halt importing LNG by the end of 2018.

Egypt has been investing in ports, refineries, pipelines and LNG stations, to prepare for the storage and transportation of gas to and from other countries.

Boosting regional cooperation, investment

The vision of Egypt as an energy hub is expected to boost cooperation between various regional nations.

Egypt and Cyprus are in negotiations to build a natural-gas pipeline, for which a preliminary agreement was signed last year. The pipeline is set to become operational between 2020 and 2022.

Negotiations are ongoing for the establishment of a pipeline to transport gas from Aphrodite gas field to Egypt’s Idku liquefying natural gas plant, Petroleum Minister Tarek El Molla said.

The Zohr, North Alexandria and Nooros gas-field discoveries have also boosted interest in investment in Egyptian oil and gas projets.

The North Alexandria concession will begin producing 500-700 mcf/d by the end of 2018, according to El Molla, who said that 83 new exploration agreements worth $15.5 billion would be signed next year, with 230 wells worth $2 billion being drilled.

Meanwhile, Exxon Mobil is reportedly in talks with the government to invest in Egypt's oil and gas production, sources told Reuters earlier this month.

Balance of payments

This appetite for Egypt’s oil and gas industry is reflected in Egypt’s latest balance-of-payments report.

In Q1 2017/2018, net investment in the oil industry surged by 84.2 percent year-on-year, the Central Bank said earlier this month.

The Zohr gas field is expected to alleviate pressure on the budget and the petroleum balance of payments.

The production of 350 million cubic feet per day is equivalent to three LNG shipments costing $90 million, ministry spokesperson Abdel Aziz told Ahram Online.

Gas from Zohr will save a monthly $60 million, i.e. $720 million per year, as production costs are estimated at a monthly $30 million.

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