Italy In Egypt: It’s A Gas
Enormous recent oil and gas discoveries in North Africa have seen a number of IOCs jostling for position, with three separate players from across the Mediterranean in Italy at the forefront: electricity and natural gas company Edison who have plays in both Algeria and Egypt, oil and gas supermajor ENI, and natural gas and infrastructure specialists SNAM.
“We have to play like the Italian football team. Over the past couple of years, we have defended; now is the moment to counterattack and score.”
Federico Ermoli, SNAM
In terms of potential from Italian discoveries in the region, the “super-giant” [containing more than 850 billion cubic meters of natural gas] Zohr field in Egypt, first discovered in 2016, could feasibly produce “one billion cubic feet (bcf) per day, ramping up annually until it reaches 2.7bcf a day at the start of 2019,” according to Claudiu Descalzi, CEO of ENI. Descalzi continues, “We evaluate this discovery to have a total potential of some 30 trillion cubic feet, making it one of the largest finds ever in the region.”
According to Descalzi, ENI’s success in exploration and discovery can be put down to a period in the late ‘90s and early 2000s, “when many of the majors elected to invest big in unconventionals and buy new reserves through acquisitions. ENI … instead put all their energy into their core bread and butter competencies of exploration. We also focalized our talent on the African theatre of operations.” In addition to Zohr, in 2016 ENI, along with BP, announced the discovery of gas in the Baltim South West area, 12km from the shore of Egypt; proclaiming in a statement that the discovery “confirms the significant potential of the so called Great Nooros Area, which is now estimated to hold 70-80 billion cubic metres (bcm) of gas in place.”
SNAM are another Italian outfit keen to capitalize on North African discoveries. CEO Marco Alverà described the findings as “very significant for North Africa” and Zohr as “a game changer … it allows Egypt to fulfil all its needs, which are great and significant.” Whilst the official Egyptian state line is that 100 percent of the newly discovered gas will be reserved for domestic consumption, SNAM feel that it is only a matter of time before the country begins to export again.
At the recent European Gas Conference in Vienna, SNAM Chairman and former CEO Carlo Malacarne told Energy Boardroom that “Recent discoveries in Egypt can be a game changer. We think it could be a real opportunity for the Mediterranean area to discover cheap energy and that is precisely why we are pushing for a connection between the south of Italy and the Egyptian hub.” Malacarne added that “We see tremendous potential for a connection, just so long as the right supporting infrastructure is enacted.”
Federico Ermoli, SNAM’s Chief International Assets Officer, also speaking in Vienna, expounded on this necessary infrastructure, explaining that “We need to see movement along the Southern corridor and SNAM is ready to make this happen … every part of the value chain needs to make its contribution but we need a special push on logistics and storage. These are potential bottlenecks.” Speaking more broadly on the company’s Mediterranean strategy, Ermoli playfully suggested that “We have to play like the Italian football team. Over the past couple of years, we have defended; now is the moment to counterattack and score.”
Writer: Patrick Burton