Egypt plugs hub status as Shell, Eni, Exxon win energy concessions

2/13/2019

CAIRO, Feb 12 (Reuters) - Royal Dutch Shell, Eni, BP and Exxon Mobil were among the winners in one of Egypt’s largest ever oil and gas exploration tenders, as the country looks to sustain an investment upswing spurred by major discoveries.

Eni’s discovery of the giant Zohr field in 2015, the largest in the Mediterranean and estimated to hold about 30 trillion cubic feet of gas, has raised interest in exploration in Egypt.

The country has reached maritime demarcation agreements with several countries in the region in its push over recent years towards increased oil and gas exploration.

Executives at a forum said Egypt’s advantages as a hub include well-developed infrastructure, established industry expertise, strong local demand, and the country’s strategic location between Europe and Asia, allowing it to send gas west or east depending on markets.

Source: EWA

They are also encouraged by Europe’s desire to diversify gas supplies and find alternative suppliers to Russia, and to reduce carbon emissions.

Egypt hopes to tap long underutilized liquefaction plants, where gas is turned into LNG, to export supplies across the Mediterranean along with that of its neighbors, including Israel, which said it would pipe gas to Egypt later this year.

“I think we’re starting to see much more robustness for this concept,” said Gasser Hanter, Shell’s country chairman, in reference to the concept of Egypt as an emerging hub.

“You’re seeing the intergovernmental agreements being sorted out, you’re seeing the deregulation of the gas market, a lot of confidence in the economy, in Egypt, that is boosting the investment in the upstream.”

However, executives also said longer-term challenges include geopolitical tensions in the Eastern Mediterranean, the need to further develop infrastructure, and competition from other suppliers including Russia and the United States.(Additional reporting by Nadine Awadalla and Eric Knecht; Editing by Catherine Evans, Susan Fenton and Alexander Smith)

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