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Eni expects to change Egyptian gas dynamics

Italian company finds what could be the largest gas field ever off Egyptian coast.

By Daniel J. Graeber
Claudio Descalzi, CEO of Italian energy company Eni, says latest gas discovery off the Egyptian coast may be a game changer for the country. Photo courtesy of Eni.
Claudio Descalzi, CEO of Italian energy company Eni, says latest gas discovery off the Egyptian coast may be a game changer for the country. Photo courtesy of Eni.

CAIRO, Aug. 31 (UPI) -- The discovery of what may be the world's largest gas field off the Egyptian coast could be a sea change for the North African country, Italy's Eni said.

Eni announced the discovery of gas in the deepwater Zohr prospect off the Egyptian coast. With an estimated 30 trillion cubic feet of natural gas in place, it's the largest ever made in regional waters and potentially the largest in the world.

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"This historic discovery will be able to transform the energy scenario of Egypt," Claudio Descalzi, the chief executive officer of Eni, said in a statement. "This exploration success acquires an even greater value as it was made in Egypt which is strategic for Eni, and where important synergies with the existing infrastructures can be exploited allowing us a fast production startup."

Egypt signed an agreement with the Egyptian government and the Egyptian Natural Gas Holding Co. to explore the field in January 2014. In March, Descalzi signed a framework agreement with the Egyptian government that called for up to $5 billion in total investments.

Political and economic instability in Egypt in the wake of the Arab Spring movements left the government in debt to energy companies eager to tap the country's reserve potential. The government this year agreed to cover at least $2 billion owed to a group of operators collectively.

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Before the latest discovery, Eni said its overall investment strategy in Egypt during the next four years will lead to the development of an estimated 200 million barrels of oil and 1.3 trillion cubic feet of natural gas. The company said it would work to fast track the development of the field by using "at best" existing onshore and offshore infrastructure.

Egypt is the largest oil producer in Africa that's not a member of the Organization of Petroleum Exporting Countries and the largest gas producer. It's also the largest oil and gas consumer in the region, leaving it struggling to support domestic demand.

Last week, Egyptian energy company EGAS signed a liquefied natural gas supply and purchase agreement with its Russian counterpart, Rosneft.

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