Israel's fears that Eni's massive Mediterranean gas find off Egypt's coast will derail its own limping gas development plans don't have to come to pass, according to Claudio Descalzi, the Italian oil and gas company's chief executive. The Zohr field's discovery on August 30 firms up the potential for a new Mediterranean hub, which can receive gas from some of the biggest newcomers in the industry and send it on to the EU, a market that's desperate to diversify its supply, Descalzi told POLITICO this week. "We can create an Eastern Mediterranean hub that can reduce the development costs for Cyprus and Israel, using the existing Egyptian facilities," he said. "It means that also for Europe, we are creating an alternative." The idea would be to connect subsea fields in Israel and Cyprus to Egypt's pipeline network. Eni's Zohr discovery is the largest-ever in the Mediterranean Sea, with an estimated 850 billion cubic meters of gas. Combined, Egypt, Cyprus and Israel now have roughly 2 trillion cubic meters, which is huge (in comparison, Europe's largest gas field, the Groningen in the Netherlands, had 2.8 trillion cubic meters when it was discovered in 1959). And there's potential for more to be found in the coming years, as Eni and other companies continue to explore and the Cypriot government looks into whether the Zohr reserve extends into its own exclusive economic zone. Caught napping But while Eni's announcement drew cheers in Egypt, it triggered panic in Israel, which has been planning for several years to pipe some of the gas from its own large offshore reserves to Egypt, as well as Jordan, Syria and Lebanon. "The discovery of the Egyptian gas field is a painful reminder that while Israel has been asleep at the wheel and delaying final approval of the gas deal and additional exploration, the world is changing before our very eyes with implications for export possibilities," Israel's Energy Minister Yuval Steinitz told Israel's Army Radio. Constantine Levoyannis, head of the Greek Energy Forum in Brussels, disagrees. "At first sight, this could be interpreted as an initial setback for Israel, but it is by no means the end of the line. If anything, it will make Israeli policymakers think more decisively about solutions that benefit both their citizens and their businesses," he said. "This is beginning of new story for the East Med." Eni expects to start producing Zohr gas by 2017 and, if the initial estimates are correct, believes it could fulfill Egyptian demand for a decade. The company still needs to secure final approvals from Cairo, but believes the government is equally keen to get the work done quickly to feed a gas-hungry domestic market. Egypt's liquefied natural gas (LNG) plant has been at a standstill since January 2014, when operator BG Group was forced to halt exports because domestic demand was too high. The country then started receiving LNG cargoes at a new import terminal this year, and is now looking to build a second. Descalzi took his message on East Mediterranean hub to the European Parliament on Tuesday evening, where he stressed that Eni's work will provide an outlet for Cyprus's Aphrodite and Israel's Tamar fields too. "We'll really be able to free much of the gas with this new hub, creating an alternative market," Descalzi told MEPs. "This gas can go to southern Europe, it could go to Italy, to Spain." For that to happen, however, the EU will first have to get around to beefing up its own interconnectors, he added. Source: Politico
