A Field Day for Oil
Egypt Finds an Offshore “Supergiant”

“It’s an exciting moment for us and also for Egypt. This historic discovery will be able to transform the energy scenario of Egypt.” Those were the words of Claudio Descalzi, the CEO of the Italian energy major ENI, as he tried to put in context ENI’s discovery of a so-called “supergiant” gas field some 120 miles off of Egypt’s Mediterranean coast. The offshore Zohr field could contain as much as 30 trillion cubic feet of natural gas, making it the largest find of its kind in the Mediterranean and one of the biggest in the world. The Guardian reports:

Eni said in a statement that the Zohr field, which covers an area of about 60 square miles (100sq km), could hold as much as 30tn cubic feet of gas.

“Zohr is the largest gas discovery ever made in Egypt and in the Mediterranean Sea and could become one of the world’s largest natural-gas finds,” it said, adding that it had full concession rights to the area.

The gas won’t start to flow at once, but this will come as welcome news for Egypt, which according to Descalzi, will be able to use the field as an energy source for a decade. ENI says it plans to use existing offshore infrastructure to help “fast-track” the development of the new find, an approach Cairo will welcome as it continues to struggle with blackouts caused by energy supply shortages amid the aftershocks of the Arab Spring.

But this is also a boon for the rest of the world. A stable and prosperous Egypt is a necessary (though not sufficient) condition for stability and peace in the region. The discovery that the Arab world’s most populous state has natural gas will help stabilize Egypt’s economy and promote the foreign investment without which it cannot prosper. Saudi and the UAE may be especially pleased, because they can now begin to think that over time they can reduce their expensive aid to Egypt.

Israeli gas companies have seen share prices drop sharply on the news, ostensibly because Egypt was expected to be a large consumer of the gas from new offshore gas fields like the Leviathan (a hostile political climate is also playing a part in the poor market performance). But while the Egyptian find may be roiling Israel’s offshore waters, it’s really Moscow that stands to be the biggest loser if any of this gas finds its way across the Mediterranean and into Europe. Policymakers there have already been clamoring for diversification away from Russian supplies in the wake of the Ukraine crisis; the Zohr field could help them cut reliance on Gazprom and weaken one of Russia’s most effective levers on the Continent.

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