Drilling operations in the Zohr Gas Field, the Mediterranean’s largest-ever find, have been resumed after it received the Saipem 10000 drillship, according to a Petroleum Ministry statement on Wednesday.
The Italian energy giant Eni, the main developer of the field, is using the Saipem 10000, which represents state-of-the-art drilling technology in deep water, to look for new wells in the Zohr concession area.
These drilling activities, expected to proceed through the first quarter of 2025, are in line with the ministry’s objective of adding new production.
In October, Petroleum Minister Karim Badawi said the government plans to increase production at the Field by 220 million cubic feet per day (cf/d) through drilling new wells.
Starting operations in 2017, Zohr was the main reason Egypt became a net exporter of gas, with production peaking to 2.8 billion cubic feet per day in the third quarter of 2021. However, technical problems related to water filtration as well as a stop in drilling activities due to the government’s delay in paying arrears to Eni led to a decline in production to below 2 billion cf/d in the first half of 2024.
The delayed arrears were not only to Eni, as Egypt has accumulated arrears of $6.4 billion to international oil explorers.
During 2024, Egypt experienced an increase in local natural-gas consumption in various sectors, led mainly by the power sector on the back of an exceptionally hot summer, by an average of 14 per cent.
This coincided with a decrease in local production by 25 per cent in May compared to its 2021 peak.
BMI, a unit of consultancy Fitch Solutions, revised its forecast for Egypt’s gas this quarter following the restart of drilling at the Zohr Field and the Raven gas project operated by British Petroleum.
“We now expect a 2.5 per cent increase in gas production in 2025, followed by an additional one per cent growth in 2026,” it said.
The second phase of the Raven Field involves the drilling of two new wells, adding 200 million cf/d (around two billion cubic metres a year) to Egypt’s output. “Together, these initiatives at Zohr and Raven are poised to drive a modest increase in Egypt’s gas production, following a drastic collapse over the past three years,” Fitch said.
Based on interviews with players in the local gas sector, a report by US investment bank Morgan Stanley said that local analysts expect Egypt’s energy balance to remain in deficit during fiscal years 2024-25 and 2025-26, due to lower gas production amid higher local demand.
Nevertheless, the report expects Egypt to return to being a net gas exporter starting in 2027 on the back of the positive outcomes of a set of measures the government took recently.
These include paying arrears owed to foreign explorers. The government paid $1 billion of arrears in January after setting a schedule to repay all the $6.5 billion accumulated dues up until June 2025.
The Petroleum Ministry is also offering incentives to energy players, encouraging them to speed up the development of discoveries and increase production. These include increasing production-sharing ratios with foreign companies in exchange for new investments.
Another step the report hails as a possible reason Egypt will resume exporting gas is increasing the share of renewables in power generation and reducing fossil-fuel consumption.
The government is keen to increase production, a fact proved by a “renewed attention to greenfield exploration over the past few months, highlighting the country’s commitment to expanding its natural gas reserves,” according to BMI.
The government launched an international round of bidding in August 2024, offering 12 blocks, 10 offshore and two onshore in the Nile Delta, for exploration. This bidding round, with a deadline of 25 February, is designed to attract global interest and investment in Egypt’s natural gas sector, needed to reduce the reliance on imports and combat the need for gas rationing domestically, stated a BMI note.
The note also named projects that are expected to add to production, including the BP project to drill two exploratory natural gas wells backed by an investment of $160 million. New wells are also being drilled in Chevron’s West Mediterranean blocks.
Another factor that supports the possibility of Egypt returning to the export markets is an agreement it is to sign this month with a consortium made up of Total of France and Italy’s Eni to transport natural gas from Cronos, an undersea deposit inside Cypriot waters, to Egypt where it will be liquefied and processed for export.
This development, revealed by an AP dispatch, is not the only Cyprus-gas-related news.
Cypriot Energy Minister George Papanastasiou was quoted by the news agency as saying that Cyprus and Egypt will also sign a separate agreement at the Egyptian Energy Summit on 17-19 February.
The agreement “foresees conveying natural gas from the Aphrodite deposit to Egypt. But it hasn’t been decided yet with the Chevron-led consortium that operates Aphrodite whether the gas will be used for domestic energy needs or be made available for export after processing in Egypt,” AP said.
Meanwhile, Egypt is trying to bridge the gap between consumption and production by securing import deals. An unnamed official source told Asharq Business this week that the country had signed $3 billion in agreements comprising 60 liquefied natural gas shipments in 2025.
Egypt imported $1.2 billion worth of energy in the summer of 2024 to end blackouts resulting from a supply gap during the hotter months.
* A version of this article appears in print in the 6 February, 2025 edition of Al-Ahram Weekly
Short link: