CAIRO (Reuters) - Major international oil companies say they plan to step up their investments in Egypt, expecting to find more oil and gas now that ENI’s giant Zohr gas discovery has put its Mediterranean waters on the map.
Once a net gas exporter, Egypt has turned into a major importer in recent years as growing domestic demand outstripped production, but the discovery of the 850 billion-cubic meter Zohr field in 2015 is expected to change that.
The field is expected to come into production by the end of the year and will save Egypt billions of dollars in hard currency that would otherwise be spent on imports.
The Egyptian government is also seeking to attract foreign investors as it seeks to transform itself into a gas trading hub for its own and other emerging Mediterranean producers.
Marc Benayoun, chief executive of Italian energy group Edison, which is exploring areas near the Zohr field, said on Tuesday he was confident more gas would be discovered.
Like other oil and gas industry executives speaking at a conference in Cairo on Tuesday, Benayoun said the fact that Egypt already had plenty of spare capacity in its existing gas pipelines and other infrastructure meant new production costs were competitive.
“We find here (Egypt) there has been very competitive costs and operating costs in a context of volatile prices. This is an area where we think we will continue to make investments and develop as opposed to other regions which are higher in cost,” he said.
“For Egypt, gas prices will be extremely important because the country has lots of gas reserves and extraordinary discoveries have been made and others will be made I’m confident in the next two, three years, and at some point the country will be in a position to export gas.”
ENI’s chief executive, Claudio Descalzi, said the Zohr field would enter production before the end of the year but the company was still exploring and expected more finds in the area.
“The big effort in Zohr is there ... but we can also find something else,” he said.
“We have Noroos – in 11 months we got to 170,000 barrels a day of gas condensate and we continue exploration.”
The presence of top level oil executives in Cairo shows how quickly the country has emerged from the shadow of major nearby oil and gas exporters in the Gulf and North Africa to become an important player in its own right.
BP, which has been present in Egypt for half a century, last year bought a 10 percent stake in Zohr from ENI. It has also been actively snapping up license blocks in Egypt’s recent exploration rounds.
“In 2016-17, we’re investing more money in Egypt than any country in the world. We have a lot of confidence in Egypt,” Bob Dudley, chief executive of BP, told the conference.
Reporting by Lin Noueihed; Writing by Asma Alsharif; Editing by Susan Fenton, Greg Mahlich