Eni Discovers 'Game-changing' Gas Field off Egypt

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Eni SpA (NYSE:E) (Rome, Italy) has discovered what it claims could be the world's largest natural gas field off the coast of Egypt in the Mediterranean sea.

The company announced that the "supergiant" gas field, located at its Zohr Prospect in the deep waters off Egypt, could hold a potential 30 trillion cubic feet--or about 5.5 billion barrels of oil equivalent (boe)--of lean gas across an area of about 100 square kilometers (about 62 square miles). Zohr, in the Shorouk Block, is the largest gas discovery made in Egypt and the Mediterranean Sea, and could provide enough gas to satisfy Egypt's demand for decades.

The discovery comes just months after Eni inked a $2 billion deal with the Egyptian government to explore in Sinai, the Gulf of Suez, the Mediterranean and areas in the Nile Delta.

"It is changing the game for Egypt," Eni's CEO, Claudio Descalzi told CNBC. "It is very important for Egypt, but also for the Mediterranean in terms of stability."

No specific timeframe was given for when extraction will begin, but the company said that it "will immediately appraise the field, with the aim of accelerating a fast-track development of the discovery that will utilize at best the existing offshore and onshore infrastructures." Production is predicted to take three to four years.

Descalzi added: "It is close to the facilities, so the time to market will be very good. We continue to do our exploration in the mature area, where we have a deep geographical knowledge, and we can take advantage of our facilities and that will make the unit cost in terms of capital very positive."

ENI has been operating in Egypt since 1954 and is the largest foreign oil producer in Africa. Through its Egyptian subsidiary, International Egyptian Oil Company (IEOC), it has a daily output of 200,000 boe. It is also part owner of the Damietta LNG Liquefaction Plant in Cairo.

Italian Prime Minister, Matteo Renzi, said: "Congratulations to Eni for this extraordinary result of a research project that is part of the relations between Italy and Egypt, with a strategic economic partnership that concerns our country and more generally the entire African continent. It very important not only for economic reasons or sustainability, but also for the future of Egypt, a key country in the Mediterranean chessboard. Now more and more will be convinced to invest in Africa and create opportunities in those areas of growth. Investment, international cooperation, social justice: these are the benchmarks of our foreign policy action in Africa."

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