What the super-gas field means for Europe’s energy market

The Italian energy company ENI found one of the biggest gas fields in the Mediterranean Sea. What is changing now for the European energy market?

On the 17th of March 2015 Egypt’s Minister for Petrol and the Director General of the Russian Gazprom LNG met to sign a contract. For the next five years Egypt, which is suffering from an energy crisis, will be buying Gas from the Russian company to meet its increasing energy demands. Seven shiploads of liquid gas will reach Egypt each year, an equivalent to over 1.000m3 of the liquid resource. Egypt, which was an exporter of energy for many years, has become an importer.

Barely half a year later, on the 30th of August 2015, the Italian energy company ENI declares that it has found the biggest gas field in the Mediterranean Sea so far. The estimated capacity it holds is big enough to meet Egypt’s energy demands for decades – or to enable it to become an exporter of energy once again. 

The gas field “Zhor” lies in the Shorouck Block in the Mediterranean Sea 

But beforehand the country needs substantial investments. Because even before the discovery of the gas field “Zhor” in the Shorouck Block off Cairo’s coast, Egypt was one of Africa’s largest exploiter of petrol and gas. That is why ENI is supposed to invest about 3,5 billion Dollars (about three billion Euros) to make the exploitation of the gas field possible. ENI’s chief executive imagines to hit this target, demanded by the state owned energy provider EGAS, by selling shares of the gas field to other investors. “The door is open”, ENI’s chief executive Claudio Descalzi told the Italian newspaper “La Republica”.

Egypt needs investment for its energy sector and acts rather open-minded in this regard. In May 2015 EGAS and the public General Petroleum Corporation declared that private providers are allowed to use public infrastructure to transport and sell gas. It is not likely that “Zhor” will change this trend. Investments are in demand for this sector.

For consumers the changes are not likely to be sensible. The price for energy is already low because of its surplus on the market. But additional charges like taxes or transportation costs let the price raise again.

Links:
Statement on the contract with Gazprom LNG
Egypt is opening its infrastructure to private vendors
Egyptian Ministry for Petrol

Cover: (c) ENI