News Analysis: Egypt pins hope on new gas discovery for energy supply

The recent discovery of the largest natural gas field in the Mediterranean Sea in the Egyptian offshore is expected to rescue Egypt from energy shortage and trouble, said experts here.

Operating in Egypt for over 60 years, Italy's Eni company announced Sunday its "historic discovery" of the massive gas field with a potential of 30 trillion cubic feet of gas and said it would ensure satisfying Egypt's natural gas demand for decades.

"It's the largest discovery of a natural gas field in Egypt, the Mediterranean Sea and the Middle East, and it is expected to contribute to resolving Egypt's energy issues as well as boosting specific industries like petrochemicals," said Economist and international energy expert Ibrahim Zahran.

Over the past few years, Egyptians have been suffering energy issues and recurrent power outages as a result of shortage of natural gas needed for operating power stations, as the electricity sector alone consumes over 61 percent of the country's total production of natural gas.

"About 98 percent of power generation depends on gas and fuel oil, which should not be the case. It should be like 40 percent of power generation based on gas and oil, 20 percent on coal, 20 percent on nuclear energy and 10 percent on renewable energy," Zahran recommended.

The Egyptian oil ministry expects production from the new massive gas field within 30 to 36 months, while Zahran expects it to take from four to five years to produce from 11 to 12 billion cubic feet per day.

"If it is used for power generation, it will be just a consumable, but it would better be used for petrochemical industries to give and additional value to the Egyptian economy," the international energy expert told Xinhua.

Zahran recommended that the government should start setting up future plans and building petrochemical factories to prepare for making best use of the production of the huge gas field, but he still rejected the idea of exporting gas to other countries.

"We exported gas before and it caused trouble, so we should not repeat the same mistake," he said, arguing that even with the new discovery Egypt does not have enough gas reserves to be an exporter like Russia, Iran and Qatar, the largest gas exporters in the world.

Discovery of natural gas in Egypt dates back to 1967 when Abu Madi gas field was discovered in the Delta region. Later in 1969, Abu Qir gas field was discovered in the Mediterranean to be the first sea gas field in the country and then Abu Gharadig gas field was discovered in the Western Desert in 1971.

As for oil, Egypt used to produce one million barrels per day and consume half of them in 1995, but production started to decline since then until it was equal to local consumption in 2008, when the country turned to an oil importer.

According to U.S. Energy Information Administration, Egypt is the largest non-OPEC oil producer and the second-largest dry natural gas producer in Africa, yet it is also the largest oil and gas consumer in the continent.

"The new massive gas discovery confirms that Egypt is rich with natural resources and it will largely satisfy the demands of the local market, the factories and the electricity sector when it starts production within three years," said Ismail Karara, oil expert and former undersecretary of Egypt's oil ministry for natural gas affairs.

The expert told Xinhua that it is the first time for Egypt to have that much gas reserves, noting the discovery is expected to attract foreign investments in the petroleum field and others.

"The discovery proves to international firms that the investment environment in Egypt is sound and promising and encourages more companies to set Egypt as a target destination for oil drilling and gas exploration," Karara told Xinhua.

Egypt used to export gas to Israel and Jordan but the country turned to a gas importer since the 2011 upheaval that toppled former leader Hosni Mubarak and the following few years of political turmoil.

Mubarak's oil minister and some of his aides have been accused of corruption and exporting gas to Israel below market prices, but they have been acquitted of the charges earlier this year.

"The turmoil disrupted the government's development plans in the oil sector over the past four years because the dues of foreign oil companies were delayed and work environment was a mess, but now Egypt is resuming development plans and is going in the right direction," the expert explained.

Karara, who was once head of Gasco national company, expects the country to give up importing natural gas by 2017 or 2018 thanks to the new gas field discovery. Enditem