Egypt: Towards an energy hub

Ahmed Kotb , Friday 3 Jan 2020

With the Zohr field’s daily production increasing and new discoveries and more regional deals coming online, Egypt moved closer towards becoming a regional energy hub in 2019

Energy hub

Natural gas production in Egypt developed to reach an estimated seven billion cubic feet per day in September 2019, compared to 6.8 billion during fiscal year 2018-19 that ended in June, 5.6 billion in 2017-18, and 4.5 billion in 2016-17.

The Italian energy company Eni said that this accelerated growth in natural gas production was mainly due to the rapid increase in production at the Mediterranean Zohr field, which it discovered in 2015. Zohr, 60 per cent owned by Eni, is one of the largest fields in the Middle East and North Africa region. 

The Zohr field started production in 2018 and is currently producing about three billion cubic feet of natural gas per day from 13 wells, helping Egypt to reach self-sufficiency in gas and to start exporting the excess. 

Egypt used to depend heavily on gas imports, especially in the years following the 25 January Revolution when companies were reluctant to produce gas due to the government failing to pay their arrears. In 2016, Egypt imported $3 billion worth of gas, but it stopped importing gas in late 2018.

The Ministry of Petroleum and Mineral Resources announced in late 2019 that it had put a number of new natural gas wells online, adding more than 250 million cubic feet of natural gas per day to Egypt’s total. 

It currently exports one billion cubic feet of gas per day from the Idku Terminal where the gas production is liquified in the only operational liquified natural gas (LNG) facility in Egypt. It also exports via pipelines to Jordan. Tarek Al-Molla, the minister of petroleum, said in March that Egypt was aiming to export two billion cubic feet of gas per day by the end of 2019.

The year also saw a number of important discoveries. Eni announced in March a new gas discovery under evaluation in the Nour exploration area in the Nour North Sinai Concession in the Eastern Mediterranean about 50km north of the Sinai Peninsula.

The Nour-1 well was drilled in a water depth of 295 metres and reached a total depth of 5,914 metres, according to Eni. Experts believe there are promising prospects for the Nour-1 well, which has good petrophysical properties, but details of the new expected reserves have not been revealed. 

Eni also announced in 2019 that it plans to raise production at the offshore Baltim Field to 500 million cubic feet of gas during the first quarter of 2020. The Italian oil giant also plans to drill 11 wells in the Nile Delta area, the Western Desert, and the Gulf of Suez by the end of 2019, and nine wells in 2020 as part of plans to expand its exploration activities.

Government officials have repeatedly stressed that the country is steadily moving towards becoming a regional hub for the trade and distribution of oil and gas through developing national production, as well as facilitating the export of gas produced by neighbouring countries to different parts of the world.

A report issued recently by the Ministry of Petroleum stated that Egypt has the infrastructure needed for transporting and trading natural gas, in addition to gas liquefaction plants and oil refineries that are being developed to accommodate the increased production. 

Developing infrastructure and increasing processing and transportation capacity is essential as more gas fields are brought online in Egypt and other countries in the region.

Georgios Lakkotrypis, the Cypriot minister of energy, commerce and industry, announced during the second ministerial meeting of the Eastern Mediterranean Gas Forum (EMGF) held in Cairo in July that Cyprus would start pumping natural gas to Egypt in 2024 for processing and subsequent export to the international market. 

He added that work on a pipeline connecting Egypt and Cyprus would begin soon.

Moreover, Egypt and the European Union have been stepping up cooperation towards realising the dream of a regional energy hub by launching cooperation between the ministry and Belgium’s port of Antwerp in July to develop bunkering services in Egypt. Bunkering is the storage of petroleum products in tanks, and it also involves refuelling ships.

Antwerp is one of the largest ports in Europe and is highly reputed worldwide for trading in oil and liquefied natural gas bunkering.

According to the Central Bank of Egypt (CBE), Egypt’s petroleum trade balance during the first half of fiscal year 2018-19 recorded a $150 million surplus, compared with a $2.2 billion deficit in 2017-18. In June 2019, Egypt’s exports of natural gas reached 1.1 billion cubic feet a day. 

*A version of this article appears in print in the  26 December, 2019 edition of Al-Ahram Weekly. 

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