Gas field discovery in Egypt a big draw for foreign investors: experts
Analysts also said that the discovery could also help Cairo consider entering the export market.
The discovery of the Zohr natural gas field off Egypt will not undermine private-sector negotiations about buying gas from Israel, Egypt's petroleum minister said this week, playing down fears that potential deals could be under threat.
"Any negotiations between private companies in Egypt and in the eastern Mediterranean, and by this I mean Israel and Cyprus, will not stop," Sherif Ismail said.
"These negotiations and initial agreements are ongoing,” he added.
Last week, the Italian energy company announced the discovery of the “supergiant” natural gas field and predicted it could held Egypt meet its gas needs for decades.
Eni said in a statement that the Zohr field, which covers an area of about 60 square miles (100sq km), could hold as much as 30tn cubic feet of gas.
The find raised concerns in Israel's gas industry that its Leviathan field would lose a deal to supply gas to a liquefied natural gas (LNG) plant in Egypt.
Late debt payments
Following the announcement, analysts predicted that the discovery was likely to attract international energy companies that had steered clear of Egypt because of late debt payments and low prices.
“The discovery is likely to encourage gas and oil multinationals such as British Petroleum and Dana Gas to invest in Egypt,” Fakhri Al-Faqi, former IMF advisor and Professor of Economics at Cairo University, told Al Arabiya News.
“It will also aid Egypt in satisfying the country’s natural gas demand for at least 35 years and ending its energy-related issues,” he added.
Fakhri said that the field could also help Cairo consider entering the export market.
Since the 2011 uprising that toppled President Hosni Mubarak, Egypt economy has been struggling from the years of chaos.
The country's total natural gas exports have declined by an annual average of almost 30% from 2010 to 2013, as a result of swiftly rising domestic demand on natural gas, which increased by an annual average of 7% between 2004 and 2013, according to a report by the US Energy Information Administration (EIA).
Meanwhile, Mohamed Abu Basha, an Egyptian economist at EFG Hermes said that the finding “brings potential relief to the country’s energy situation in terms of both availability and price.”
Abu Basha added that the size of the find was equivalent to 45 percent of Egypt’s reserves.
The new discovery stirred mixed reactions from Egyptians and led to the creation of a new hashtag #Discovery_of_Egypt’s_biggest_oil_field on social media.
In response to the hashtag, many Arabs welcomed the big news and praised Egyptian president Abdel Fatah al Sisi.
Egyptian billionaire and telecom tycoon Naguib Sawiris said: “Pleasant and great news … Italian oil company Eni says it has discovered a huge gas field in Egyptian waters … Solved.”
Meanwhile, Kuwaiti writer Fajr Al-Saeed said: “Egypt announces the discovery of the largest gas field ever in the Mediterranean ... Sisi is a good omen."
Other users described the discovery as a “shock” for the Gulf state of Qatar and the Islamist Muslim Brotherhood group. The Muslim Brotherhood is banned in Egypt, while Qatar has frosty ties with the Sisi government.
Ahmed Moussa, a prominent Egyptian media figure wrote: “a shock [for the Muslim] Brotherhood, Qatar, Israel!!”
Despite the optimism of many, some Arab users remained cautious regarding the findings.
@_egitto, a Twitter and Facebook user, doubted the news posting on his accounts the front page of Egyptian daily Al-Joumhouria dated from 1967.
Al-Joumhouria’s front page, which showed a similar oil field discovery, was accompanied by the headline: “Our petroleum income will be more important than Saudi Arabia and Libya.”
While Egyptians seemed divided over the new discovery, some experts described the first reactions as “rushed.”
“Nothing has been totally confirmed … Nothing is sure yet so any comments or reactions for the time being would not be accurate,” Ahmad al-Najjar, an economy expert at the al-Ahram Centre for Political and Strategic Studies told Al Arabiya News.
“All the reactions that emerged so far are rushed,” he said.