Page 5 - DMEA Week 09 2020

DMEA COMMENTARY DMEA
almost doubled Egypt’s gas reserves.
In January 2020, Egypt started importing
natural gas from Israel’s largest offshore gas field Leviathan.
The gas is intended for domestic consump- tion and for liquification for export to other mar- kets - a development that will be welcomed by Europe, which is trying to lessen its dependence on natural gas imported from Russia. In particu- lar, it is a landmark step toward Cairo’s ambitious plan to become a regional energy hub.
In a statement announcing the first transfer, the Egyptian Ministry of Petroleum and Mineral Resources said the step “represents an important development that serves the economic interests for both countries”.
In response to rumours of Egypt importing large quantities of gas to fill the deficit in its local market, the media centre of the Egyptian cabinet explained that Egypt had succeeded in achieving self-sufficiency in natural gas since October 1, 2018, and even became a production hub during the last quarter of the same year.
The statement revealed that the Egyptian pri- vate sector had signed agreements to purchase gas from Israeli fields, to be pumped through the pipelines of the Egyptian Natural Gas Holding, liquefied at the Egyptian liquefaction factories and then exported to Europe, thus enhancing Egypt’s project to become a regional centre for trading gas and oil. Israel began pumping natural gas to Egypt for the first time earlier this month under a $15bn, 15-year landmark deal.
The statement referred to the increase in the volume of Egypt’s natural gas production, reaching around 7.2bn cubic feet (204mn cubic metres) per day, as well as saving approximately $1.5bn annually that was previously spent on importing liquefied gas.
Theministrydisclosed:“Thelargestgasfield in the Mediterranean has already been discov- ered, i.e. the Zohr field, which contributes about 40 per cent of Egypt’s natural gas production, and achieves a record in its production estimated at 2.7bn cubic feet [76.5 mcm] per day.”
The authorities started pumping natural gas from the field, through the pipelines of the Egyp- tian Natural Gas Holding Company, at the end of December 2017. The total investment volume for the development of the field over its lifetime is around $15.6bn, with a volume of gas reserves of about 30tn cubic feet (850 bcm), according to
the ministry statement.
It is worth noting that over the past four years,
27 projects were implemented to develop gas fields with investments amounting to $31bn, at a production rate of around 7.6 bcf (215 mcm) of natural gas per day.
The increase in local natural gas production has succeeded in covering the needs of economic sectors and citizens, where the annual rate of nat- ural gas delivery to homes increased to 1,250,000 housing units, bringing the total of delivered gas to more than 10.7mn housing units since the start of exploiting the field. Meanwhile, 43,000 cars were converted to operate on natural gas, bringing the total number of converted automo- biles to over 300,000.
In early February there was a setback to these plans when a gas pipeline in Egypt’s Sinai Peninsula was blown up. There were conflict- ing reports on the identity of the pipeline: the Islamic State extremist group said that it blew up the pipeline, claiming it was connected to Israel, but security sources earlier said the pipeline hit was a domestic one that connects to a power station in El-Arish, powering homes and factories in central Sinai. No casu- alties were reported.
Masked gunmen drove a four-wheel drive before detonating explosives in the attack, car- ried out around 80 km west of the provincial capital El-Arish. Some media reports in Egypt and Israel said, however, that the section of pipe- line hit was part of Israel’s Leviathan offshore field that connects the two countries — claims denied to AFP news agency by the Leviathan consortium.
But in a statement posted on its Telegram chat groups, IS said: “caliphate soldiers targeted... the natural gas line linking the Jews and the apostate Egyptiangovernment.”
It claimed that the section of the pipeline hit was in the Sinai village of Al Teloul and that sev- eral explosive devices were used to blow it up, causing “material damage.”
One of the two offshore fields managed by Israeli and US firms in the deal, Leviathan is esti- mated to hold 535 bcm of natural gas, along with 34.1mn barrels of condensate.
Egypt has previously exported gas to Israel but land sections of the export pipeline were tar- geted multiple times by Sinai militants in 2011 and 2012. ™
The Leviathan gas field, off Israel.
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