Egypt may return to gas exports after super-giant Zohr discovery

Jun 30, 2016 12:00 AM

Egypt may resume natural gas exports thanks to major discoveries off its shores, according to Snam SpA, Europe’s biggest gas infrastructure company.

The findings are “very significant for North Africa” and especially Egypt, the most populous Arab nation, where demand for gas is rising for electricity generation, said Marco Alvera, the CEO of Milan-based Snam.

Italian oil company Eni SpA called the super-giant Zohr field it discovered last year the largest in the Mediterranean. Eni and BP also made a “significant” find this year in the Nile Delta.

“Certainly Zohr is a game changer,” Alvera said. “It allows Egypt to fulfill all its needs, which are great and significant,” as well as resume exports, he said.

Egypt was a net exporter of LNG from 2005 until 2014, when declining output and power shortages as a result of political upheaval forced it to divert fuel for its own use. Egypt sent two cargoes this year as Royal Dutch Shell, a buyer of the country’s LNG, said sporadic exports are possible after the 2014 notice of force majeure—a provision protecting companies from liability for unfulfilled contracts.

Egypt’s share in global LNG trade reached about 7% in 2006 with 10.5 million metric tons shipped, before declining each year since then, according to the International Group of LNG Importers.

Snam’s unit GNL Italia owns and manages an LNG regasification terminal at La Spezia, the first LNG import plant to be built in Italy, and one of the country’s three such facilities.

Egypt has said it would keep all the gas from its Zohr field, with production seen by the end of 2017.

The country has already installed two floating storage and regasification units and has said it plans to add a third such facility to meet the growing demand for LNG imports.

Egypt’s LNG import demand is likely to jump in this year before falling from 2018 until it becomes self-sufficient from 2022.

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