The Strategist

Discovery of the New Gas Field in Egypt Undermined the Prospects of Gas Production in Israel


09/02/2015 - 15:52



Shares of Israeli gas companies collapsed after Eni reported the discovery of "super-giant" gas field off the coast of Egypt. Because of it, the prospects for Israeli gas projects, the implementation of which was delayed for a long time because of political differences, became even murkier.



Crescent Petroleum/Icethorn
Crescent Petroleum/Icethorn
Delek’s shares, one of the main investors in the development of the Israeli field Leviathan, on Monday fell by 14%, and Avner Oil Exploration - almost 16%. Investors are concerned about the increased economic risks, and on Tuesday Delek’s quotes fell by 1%, and Avner grew by only 0.5%.

On Sunday, Italy's Eni said it had discovered the largest in the Mediterranean Sea gas field 190 km off the coast of Egypt. It can "change the energy scenario" of the country, which is experiencing a shortage of gas, said Eni. On Monday, Eni’s share price rose 1.5%, but on Tuesday fell by 1.7%.

In 2014, Leviathan deposit investors reached a preliminary agreement for the supply of gas to a LNG terminal of BG Group in Egypt. It is a key part of the business plan for the development of Leviathan worth $ 6.5 billion, and its members have agreed to carry out deliveries to neighboring Jordan.

However, the project's implementation in life interfere with lower gas prices and growing political divisions in Israel. December 2014, the antitrust authorities of the country have decided that the consortium of investors, that implements the project, should be disbanded. It was assumed that this Wednesday the parliament would vote on the plan development of the field, which would allow the government to continue the project for national security in spite of the antitrust claims. Nevertheless, on Monday, Economy Minister Aryeh Deri said he is not going to support the government's plan, even if the parliament approves it, and after that, Prime Minister Benjamin Netanyahu has canceled the vote.

Leviathan field was discovered in 2010 in the Mediterranean Sea off the coast of Haifa and is considered one of the biggest offshore gas fields in the world. Its reserves are estimated at 623 billion cubic meters of gas; the Egyptian deposit’s reserves - 850 billion cubic meters.

Earlier it was reported that Egypt is going to suspend imports of natural gas in the 3-5 years in connection with discovery one of the largest gas fields in the world, - the statement of the official representative of the Ministry of Petroleum and Mineral Resources Hamdi Abdelaziz on television channel "Al-Asym".

- It is important that we do not need to import gas from other countries in this case, - he said.

Abdelaziz confirmed that the deposit, discovered in Egypt by the Italian oil and gas company Eni, is the largest discovery since 1967. According to him, the new gas reserves at current consumption will be sufficient for Egypt for at least 10 years.

source: reuters.com




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