November 7, 2021

Egypt attracts new exploration interest from oil, gas giants: IHS Markit


Eastern Mediterranean has proven remarkably resilient to broader upstream industry pressures of energy transition, portfolio concentration

Despite steeper fiscal terms than neighbouring littoral states, Egypt attracts new exploration interest from oil, gas giants, according to the latest research note issued by the IHS Markit.

It explained that Egypt has retained interest from majors such as Eni, BP, and Shell and attracted new exploration interest from majors such as Chevron, TotalEnergies, and ExxonMobil, all of whom are keen to explore the pre-salt clastic and carbonate plays of the Eastern Mediterranean offshore basins. Many of the leading players have been reassured by regional political collaboration to the extent of taking cross-regional positions with a focus on exploration.

The research said that the Eastern Mediterranean region has proven remarkably resilient to broader upstream industry pressures of the energy transition and portfolio concentration – attracting significant interest from Global Integrated Oil Companies (GIOCs) in offshore exploration license awards – as well as new entry by smaller E&P players focused on onshore and shallow water areas. The region currently generates gas production of about 7.8 Bcf/d from total discovered recoverable resources of 144 Tcf, with significant upside exploration potential located offshore Egypt, Cyprus, and Israel.

The outlook for upstream growth in the region is promising, with the creation of the East Mediterranean Gas Forum (EMGF) by host states, the recovery in global gas markets, the transition within the region’s energy sector toward cleaner power sources and the continued success of deepwater exploration efforts which have been set back by COVID-19 pressures, but which are expected to re-emerge in earnest in from 2022.

According to the IHS Markit, Egypt’s gas balance is on a knife’s edge though, as the long-term production outlook for the mature phase Nile Delta Basin assets is one of decline. It said that power demand in Egypt has increased significantly over the past decade thanks to a growing population, urbanisation and an expanding economy; and despite major advances in renewable energy with over 16 GW of projects in the pipeline, natural gas is projected to remain the dominant fuel for power generation until at least 2040.

It added that large gas discoveries within the Emerging phase Levantine Basin and Eratosthenes Carbonate Platform have proven to be pivotal for the region, and Israel, which was once dependent on Egypt for gas, now has gas surpluses to offer to both Egypt and Jordan.

IHS Markit pointed to that while 2021 has seen a significant market recovery for LNG exports, with increased spot prices allowing Egypt to restart its second LNG export facility at SEGAS in February 2021 and re-establish material volumes of exports during the year, reliability of production is becoming an issue and Egypt’s LNG plants could once again risk potential shutdown, unless short-cycle supply and new resource additions are secured, whether from Egypt or from the wider region.

The research note mentioned that regional dynamics could shift again on further discoveries, mentioning that six high impact wells are planned in neighbouring basins within Cypriot, Israeli and Lebanese waters within the next two years.

It added that competing forces such as conflicting national policies, boundary disputes, differing corporate interests and an evolving landscape of gas demand all have the potential to influence development strategies and timelines.

“Even so, a significant new gas find could be a game changer as littoral states explore mutually beneficial commercialisation routes for Eastern Mediterranean offshore gas resources beyond the current focus on regional demand and Egyptian export facilities,” the research concluded.

dailynewsegypt


Categories : oil and gas

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