Natural Gas Discovered in Egypt’s Nile Delta; Will Israeli Gas Still Be Needed? – The Jewish Press

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Natural gas waits for no bureaucracy, and consumers clamor for energy no matter what. Cairo cannot wait for Jerusalem to untangle its political squabbling and eternal red tape.

Instead, Italian energy company Eni was given the green light to search for more gas off Egypt’s Mediterranean coast, and along the Nile, according to UPI Business News.

This week, the company announced its efforts have met with success.

Italian energy company Eni said in a statement to media, “Preliminary estimates of the discovery account for a potential of 530 billion cubic feet of gas in place with upside, plus associated condensates.”

The firm signed two off-shore deep-water Mediterranean exploration agreements in January after a 2013 auction held by Cairo. The exploration follows a $5 billion framework agreement signed in March to develop Egypt’s oil and gas reserves.

The new reservoir was found in the Nooros exploration prospect in the Abu Madi West license area, about 75 miles northeast of Alexandria, according to the report. The discovery is emblematic of the company’s strategy to “focus on Egyptian assets close to existing infrastructure and with high resource potential,” Eni said in its statement.

The new discovery will go into production by September, using nearby existing gas treatment facilities, UPI reported. Eni has been operating in Egypt since 1954. The company currently has an equity production of some 210,000 barrels of oil equivalent per day.

One month ago, Emirati energy firm Dana Gas also announced plans to launch a new drilling campaign in Egypt. Under the deal, Dana will have the right to sell the government’s share of the reserves.

Israeli Energy Exports to Egypt As far back as April 2014, Israel and Egypt have been discussing a deal to export Israel’s natural gas to Cairo. Deals were already signed by Israel with Jordan and the Palestinian Authority despite the diplomatic friction with the latter.

This past February, the Noble Energy-Delek Group which owns the mammoth Israeli Leviathan gas field sent a delegation to Cairo to discuss Israeli gas export to Egypt from the offshore Tamar gas field. The gas would flow to Egypt’s Damietta LNG (liquified natural gas) plant, according to Egyptian oil ministry sources who spoke with Reuters.

The Egyptian government finalized a long-delayed deal for an LNG import terminal and has already reached an agreement to import gas from Algeria. Talks between Cairo and Russia are continuing.

Egypt is also negotiating for gas imports from the Aphrodite reservoir in Block 12 of Cyprus. The island nation recently nixed a bid to import gas from Israel’s Leviathan field for its own domestic use, due to the ongoing snarl of red tape that has been tying up industrial progress on Leviathan in general.

Noble-Delek Talks with BG in Egypt Noble-Delek group, meanwhile, is doing its best to carry on despite the Israeli penchant for bureaucracy. The group remains in talks with Britain’s British Gas (BG) Group that runs one of Egypt’s LNG plants, as well as with the Egyptian Dolphinus Group.

The consortium spent most of last year discussing the deal to build the $2.2 billion 10 billion cubic meter (bcm) sub-sea pipeline to link up with the BG facility, to be completed by 2023.

The group also signed a letter of intent with BG that states “if Leviathan is not developed on schedule, Aphrodite will supply them with the gas they need,” according to an industry source. A similar letter of intent to sell 2.5 annually to Dolphinus was signed several months ago, using the Tamar field as the source for the gas. The partners said at the time the gas could flow for private industry within 2015.

The infrastructure to pipe the gas already exists: Egypt’s East Mediterranean Gas Company supplied Israel with 40 percent of its natural gas through a pipeline for years, starting in 2008.

Constant terrorist attacks that targeted the pipeline finally put an end to the arrangement in April 2012.

One new plan to circumvent that problem now under consideration is to build a sub-sea pipeline from Leviathan to the BG Group offshore pipeline network off the Egyptian coast. Israeli gas would then feed directly into the Egyptian LNG plant at Idku, thus reviving output at Idku and launching Israel’s firsts exports from an Egyptian plant – an industrial and diplomatic coup.

A gas deal between Jerusalem and Cairo would also allow export access to Asian markets in addition to replenishing Egypt’s dwindling supply in its liquified natural gas (LNG) plants.

A Future for Israeli Energy in Turkey? A 25-year gas deal between Turkey and Israel was also reportedly in the works, according to an April 2014 report in the Hurriyet Daily News. If the deal had been signed, Turkish sanctions against Israel would have been lifted and ambassadors returned to their respective embassies.

Construction on the first pipelines between Israel and Turkey was to begin as soon as the second half 2015.

A second pipeline through Turkey linking Israel with western Europe and the Caspian by 2019 could also mean another new market for Israeli gas.

The drive to diversify the market away from Russia would have justified the inclusion of Israeli gas along with Azeri, Iranian and Kurdish product, Mehmet Ögütçü, chairman of London-based Global Resources Corporation consultancy, told Hurriyet.

But none of that is likely to take place – at least on schedule – due to the rage of President Recep Tayyip Erdogan over Israel’s counter terror war last summer against Hamas terrorists in Gaza. Erdogan likened Israel’s actions to those of “Hitler” despite the fact the military action was a clear response to ceaseless rocket and missile attacks launched by Gaza on the civilian population of Israel’s southern region.

Erdogan and his AK Party have since lost the political majority in the country’s recent parliamentary elections. That change in the nation’s political climate may provide new hope for the future of Israeli-Turkish energy.

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