On Sunday, Italian energy group, ENI announced that it has discovered a gas field off the coast of Egypt. This discovery, which may be the largest oil field in the world, is said to cover an area of 1,450m (4,757 feet) beneath the surface. It could also hold as much as 30 trillion cubic feet of gas or 5.5 billion barrels of oil equivalent.
This discovery has been interpreted as a sign that Egypt’s energy crisis is near to an end. Egypt’s energy crisis has been lingering since the ousting of Hussein Mubarak in 2011, which also made the country incur a lot of debt.
Angus Blair of investment advisory firm Signet told AP that this latest discovery of 30 trillion cubic feet, represents about half of Egypt’s current needs and would add to its current 65 trillion cubic feet. This could cut its trade deficit and bring in tax revenue when it comes online in some five years.
These are the measures Egypt has taken so far to meet its demand for energy:
Signing energy deals
Since Egypt’s President (Abdel-Fattah), el-Sissi assumed office he has been at the forefront to ensure that Egypt’s energy crisis is resolved. Early this year the country signed an energy deal worth $4.6 billion with Germany’s Siemens AG to build a new 4.4-gigawatt power plant in southern Egypt and generate two gigawatts of wind power. The North African country also grabbed the attention of local cable maker, El Sewedy Electric that formed the Egyptian Company for Solar Energy Development (ECSED). The company agreed to a deal of about $75 million to develop a 50-megawatt solar energy power plant in Aswan, about 800km south of Cairo.
Importing gas to meet demands
Egypt had to turn to importing after decades of been an exporter in order to meet its daily demand for gas. They signed a deal with BP to supply 16 cargoes of Liquefied Natural Gas (LNG), which will be received through 2015-2016.
The country also reached an agreement with Algeria’s state-run Sonatrach and Russia’s Gazprom’s trading arm for the supply of six cargoes and 35 cargoes of LNG respectively. It also signed an agreement with Cyprus for gas.
Apart from deals for LNG imports, the Egyptian government also focused on agreements to fast track the development of its potential gas reserves, which in the next few years are expected to increase supply.
Curtailing export of gas
To ensure that it met local energy demand, last year, the country, curtailed exports as production fell. This forced BG Britain’s second-largest oil company and BP, to invoke a force majeure. At the time of this force majure the government owed BG about $1.2 billion in payments for gas. Other firms operating in the country, such as Eni, also shut down operations due to lack of gas.
Egypt ensured that domestic supply, which earned oil firms far less than they sell gas in the international market, was a priority. However, the country still needs imports to satisfy local demand, which has grown rapidly due to its use for power generation.
According to experts, it will take years for the new gas field to be fully developed and will probably not bring the Gulf-style riches to the Arab world’s most populous country.
