The Italian oil and gas major ENI announced this week that it had won the rights to develop onshore oil fields and offshore gas fields in Egypt last December. Ahram Online reports:
Egyptian Natural Gas Holding Company (EGAS) awarded ENI two deep-water blocks near Cyprus’ nautical border in the Mediterranean Sea. […]Egypt has been plagued with energy shortages as its gas production dropped 17 percent year-on-year in July, while its exports fell 73.4 percent.
This is interesting news on several grounds. First, big oil and gas discoveries in the Mediterranean represent one of the few possibly game changing developments for Egypt’s otherwise dismal economic outlook. Egyptian leaders will hope to emulate Israel’s success in identifying and exploring vast reserves of offshore hydrocarbons in the eastern Mediterranean. Despite the possibility of rising tensions in the region as a result of these discoveries, that’s good news for Cairo.Second, this also has diplomatic implications: In Italy, big corporations like ENI are close to government policy (in fact, the Italian government holds a 30 percent stake in the oil and gas company, and by the way the “N” in the company’s name stands for Nazionale). In the Berlusconi era, ENI made a lot of energy bets in places like Russia and Iran. We’re now seeing signs that Egypt, backed by UAE and Saudi, is looking to project more force and energy (along with Algeria) into the stabilization of North Africa. Italy seems to be getting with the program.