Italian oil company Eni stunned markets on Sunday after declaring the Mediterranean’s biggest-ever and the world’s 20th largest gas discovery off Egyptian waters, in the Zohr field holding an estimated 30 trillion cubic feet (tcf) of gas.
“It’s a bit early to assess the quality of the data and their significance, but if they are accurate, the discovery off Egypt’s coast is bad news for the Israeli economy and the companies holding the (gas) assets in particular,” said Eldad Tamir, chief executive of Israel investment house Tamir Fishman.
Zohr reserves will be direct competitors to the Israeli projects, potentially driving down prices along with profit margins, he said.
Accounting for around 40 percent of Egypt’s proven gas reserves, Zohr, which analysts say could prove to be far larger, will reduce the country’s dependence on sea-borne gas imports and revive industrial capacity idled due to gas shortfalls.
“Accordingly, we expect significant capacity expansion plans to be revived over the coming 6-12 months and expect foreign direct investment to recover sharply in sync,” Cairo-based Pharos Research said in a note on Monday.
After four years of turmoil, rising gas demand turned Egypt from net exporter to importer, luring Israeli resource firms looking for export markets to justify developing their own sizeable gas deposits, previously the Mediterranean’s biggest.
Explorers lured by rising earnings on oil and gas production set by the Egyptian state are seeing the country in a new light even though they are collectively still owed billions, unlocking major new investments and boosting reserves.