JERUSALEM/CAIRO, Aug 31 (Reuters) – Egypt’s historic gas discovery threatens to sink Israel’s fledgling gas export bonanza, which was counting on deals with Cairo to get it off the ground.
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.
Zohr jeopardizes lucrative deals being negotiated between Israeli companies and their Western counterparts operating in Egypt, which may now no longer need to import.
Shares in U.S. based Noble Energy, which is developing Israel’s biggest gas field Leviathan with Israeli energy companies, fell 7.1 percent at $32.08 in New York.
Israel’s top energy firms, including Delek Group, Avner Oil and Ratio, saw 4.5 billion shekels ($1.14 billion) wiped off their market capitalisation on Monday.
“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.
Delek Group, a partner in Israel’s largest gas field Leviathan, sought to reassure investors by saying foreign firms in Egypt will still need Israeli supplies.
“For Israel, this closes the option of exports to Egypt but the real motherload for Israel was the domestic market,” said Brenda Shaffer, energy specialist at the University of Haifa.
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.
“This is important geopolitically for Egypt, it’s a sign of confidence in (President Abdel Fattah) al-Sisi’s economic policies,” Shaffer said. (Additional reporting by Tova Cohen in Tel Aviv, writing by Oleg Vukmanovic, editing by William Hardy)
By Wladimir Pantaleone and Angelo Amante PALERMO, Italy, Dec 20 (Reuters) – Acourt on Friday acquitted Italian Deputy Prime Minister Matteo Salvini of charges of kidnapping over 100 migrants aboard a boat he had...
Denmark has rejected a Japanese request to extradite anti-whaling activist Paul Watson over criminal charges dating back more than a decade, a Danish lawyer representing Watson said on Tuesday.
The Bureau of Ocean Energy Management (BOEM) has confirmed competitive interest in two offshore wind areas (WEAs) off the southeast Texas coast, following an unsolicited lease request from Hecate Energy...
December 13, 2024
Total Views: 1839
Sign Up Now for gCaptain Daily
We’ve got your daily industry news related to the global maritime and offshore industries.
JOIN OUR CREW
Maritime and offshore news trusted by our 109,798 members delivered daily straight to your inbox.
Your Gateway to the Maritime World!
Essential news coupled with the finest maritime content sourced from across the globe.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.