The Eastern Mediterranean Gas
Revolutionary technologies used to explore and produce oil and gas lying under deep Mediterranean waters have led to the discovery of hydrocarbons in volumes that, once commercially available, will reshape the energy map of the Middle East and, perhaps, Europe.
A changed energy panorama will inevitably alter the geopolitical landscape, thus creating new opportunities and perils.
Between 2010 and 2011, when oil prices hovered around $80 per barrel and the price outlook for the medium term was rosy, international energy companies engaged in an ambitious effort to find oil and gas in the Mediterranean Sea. And they did. In fact, their efforts yielded far better results than anyone had expected.
In 2010, they discovered the Tamar and Leviathan gas fields in Israeli territorial waters. These fields have combined estimated reserves in the order of 17 trillion cubic feet of gas(tcf), a volume that would place them among the 30 largest gas fields in the world, larger - for example - than most gas fields found in the North Sea.These gas reserves are roughly equivalent to 3 years of Europe's gas consumption.
The U.S. Geological Survey estimated means of 1.8 billion barrels of recoverable oil, 223 trillion cubic feet of recoverable gas, and 6 billion barrels of natural gas liquids in the Nile Delta Basin Province using a geology-based assessment methodology.
The US Geological Survey estimates that some 122 trillion cubic feet of undiscovered natural gas could eventually be found in the Levantine basin, in the Eastern Mediterranean Sea, a volume that would make the region an important player in the European gas industry. An estimated 223 trillion cubic feet (tcf) (mean estimate) of undiscovered, technically recoverable natural gas is present in the Nile Delta Basin Province in the eastern Mediterranean region. Undiscovered, technically recoverable resources are those that have yet to be discovered but, if found, could be produced by using currently available technology and industry practices.
This study is the first U.S. Geological Survey (USGS) assessment of this basin to identify potentially extractable resources. The USGS also recently completed an assessment of the adjacent Levant Basin Province, estimated to contain 122 trillion tcf (mean estimate) of undiscovered, technically recoverable natural gas.
The costs of developing these resources will be high, as a typical development well drilled in that basin will cost between ~ $200+ million and a gas pipeline to Europe is expected to cost as much as $20 billions. These high costs and the technical complexity of the operations had delayed exploration efforts for years.
Now, these important discoveries have sparked not just great hopes of energy self-sufficiency for the countries of the Eastern Mediterranean but also of an important source of export revenues for their economies. The energy potential of the eastern Mediterranean has intensified the Euro-Mediterranean synergy and, in the future, will increase the liquidity of the European gas market and will have a positive impact on prices for end customers.
Discoveries of natural gas in the Mediterranean Sea come at the right time - when the European Union has approved the EU LNG and Storage Strategy and new rules for security of supply. With significant resources available in Cyprus, Egypt, Israel,Lebanon and Syria, the Eastern Mediterranean might become a promising source of gas supply for the EU. At the same time, it could create a win-win situation for the whole region and contribute to peace and stability.
As Egypt’s dependency on gas increases, particularly electricity, the country is in the midst of restructuring to meet its energy demands as well as becoming a regional energy hub.Egypt has undertaken energy reforms to attract more international investments. Several projects are to be developed, specifically, Zohr, North Alex, and Atoll, and a few planned projects worth $10/12 billion, to increase the country’s capacity.Egypt, boosted by the recent success with the offshore Zohr gas project in Shorouk concession, intended to offer 28 blocks for bidding by foreign oil and gas companies soon.
Zohr discovery has raised foreign oil companies’ interest and attract investment potential in (offshore Egypt’s) deepwater areas.
Eni's parallel-development method has enabled it to smash records at its mega-giant Zohr gas project.
The nearly complete control room at Eni's Zohr onshore facility on the Mediterranean coast west of Port Said has all the appearances of a mission control centre for a space programme. Semi-circular consoles are arranged in front of a giant screen high up on the wall ahead. Beneath the tiled floor, workers are feeding in and connecting lines of cable—some of the 1,600 kilometres that have been installed thus far at the plant.
This building, smelling of newly applied paint and cement, will soon take charge of every single aspect of the Zohr project. It will link by radio to an unmanned control platform 85km offshore, which in turn, by means of fibre-optic cables and hydraulic and electrical lines, will set the flow of gas at the Zohr field, which is 190km north of Port Said. The Eni staff like to point out that the control platform lies 160km from the field, "the distance from Milan to Genoa".
The story of how Eni discovered a previously unknown carbonate layer under the Mediterranean in August 2015 has been told many times. Much less has been said about the process that enabled Eni to smash all existing records by bringing Zohr on stream in less than two and a half years.
The magnitude of the discovery (gas in place of at least 30 trillion cubic feet) in the Shorouk Block was obvious as soon as exploration wells had been drilled. Without delay, both Eni and the Egyptian government agreed that the find should be developed as quickly as possible. The whole project would be operated by the Belayim Petroleum Company (Petrobel), a joint venture between Eni and Egyptian General Petroleum Corporation. An execution strategy was set, leveraging the experience of Petrobel in Egypt and with the cooperation of major contractors Petrojet, Enppi, Saipem and PMS. This close coordination from day one, Eni executives say, contributed to the success of the Zohr project.
New investors
The rapid pace of development—the year-long exploration programme at the field and the simultaneous upstream-downstream work—involved huge expense. To help cover the costs, Eni adopted another aspect of its dual-exploration model: benefiting from early monetisation by the sale of minority stakes, while maintaining the operatorship. In November 2016, BP acquired a 10% stake in Zohr. Rosneft took a 30% share the following month.
US oil giant ExxonMobil announced the discovery of a significant offshore gas find in Cyprus’s Block 10
According to the preliminary interpretation of the data, the natural gas reservoir at the Glaucus-1 well is estimated between 5 trillion to 8 trillion cubic feet. ExxonMobil and partner Qatar Petroleum started drilling in block 10 of Cyprus’s exclusive economic zone (EEZ) in mid-November. Noble Energy made a significant discovery in the country's Aphrodite field in 2011, while last February, Italy’s ENI discovered Calypso in block 6, though confirmatory drilling is still pending.
Significant discoveries of gas in the Mediterranean Sea might add to the new world gas map.Now the significant gas resources found or estimated to be found in the Mediterranean Sea could be a game changer.
Prices and Rules
The elation in the region about the natural gas finds has been dampened by the current outlook for oil and gas prices. At current and expected mid-term prices, the economics of these new finds are not that promising. In addition, Israel’s stance on its domestic pricing of gas and the regulations that are being considered regarding the volumes of gas that will be available for exports have raised some concerns among the foreign operators, concerns that could also appear among operators of the newly found Egyptian gas finds if their regulations track those of Israel. The regulatory and tax frameworks are still being debated and negotiated and therefore their final design is still uncertain. In order for the Eastern Mediterranean gas discoveries to become commercially feasible, the international price of oil will probably need to return to the levels that made exploration an attractive proposition in the first place, about $80/90 per barrel.
A changed energy panorama will inevitably alter the geopolitical landscape, thus creating new opportunities and perils.
Between 2010 and 2011, when oil prices hovered around $80 per barrel and the price outlook for the medium term was rosy, international energy companies engaged in an ambitious effort to find oil and gas in the Mediterranean Sea. And they did. In fact, their efforts yielded far better results than anyone had expected.
In 2010, they discovered the Tamar and Leviathan gas fields in Israeli territorial waters. These fields have combined estimated reserves in the order of 17 trillion cubic feet of gas(tcf), a volume that would place them among the 30 largest gas fields in the world, larger - for example - than most gas fields found in the North Sea.These gas reserves are roughly equivalent to 3 years of Europe's gas consumption.
The U.S. Geological Survey estimated means of 1.8 billion barrels of recoverable oil, 223 trillion cubic feet of recoverable gas, and 6 billion barrels of natural gas liquids in the Nile Delta Basin Province using a geology-based assessment methodology.
The US Geological Survey estimates that some 122 trillion cubic feet of undiscovered natural gas could eventually be found in the Levantine basin, in the Eastern Mediterranean Sea, a volume that would make the region an important player in the European gas industry. An estimated 223 trillion cubic feet (tcf) (mean estimate) of undiscovered, technically recoverable natural gas is present in the Nile Delta Basin Province in the eastern Mediterranean region. Undiscovered, technically recoverable resources are those that have yet to be discovered but, if found, could be produced by using currently available technology and industry practices.
This study is the first U.S. Geological Survey (USGS) assessment of this basin to identify potentially extractable resources. The USGS also recently completed an assessment of the adjacent Levant Basin Province, estimated to contain 122 trillion tcf (mean estimate) of undiscovered, technically recoverable natural gas.
The costs of developing these resources will be high, as a typical development well drilled in that basin will cost between ~ $200+ million and a gas pipeline to Europe is expected to cost as much as $20 billions. These high costs and the technical complexity of the operations had delayed exploration efforts for years.
Now, these important discoveries have sparked not just great hopes of energy self-sufficiency for the countries of the Eastern Mediterranean but also of an important source of export revenues for their economies. The energy potential of the eastern Mediterranean has intensified the Euro-Mediterranean synergy and, in the future, will increase the liquidity of the European gas market and will have a positive impact on prices for end customers.
Discoveries of natural gas in the Mediterranean Sea come at the right time - when the European Union has approved the EU LNG and Storage Strategy and new rules for security of supply. With significant resources available in Cyprus, Egypt, Israel,Lebanon and Syria, the Eastern Mediterranean might become a promising source of gas supply for the EU. At the same time, it could create a win-win situation for the whole region and contribute to peace and stability.
As Egypt’s dependency on gas increases, particularly electricity, the country is in the midst of restructuring to meet its energy demands as well as becoming a regional energy hub.Egypt has undertaken energy reforms to attract more international investments. Several projects are to be developed, specifically, Zohr, North Alex, and Atoll, and a few planned projects worth $10/12 billion, to increase the country’s capacity.Egypt, boosted by the recent success with the offshore Zohr gas project in Shorouk concession, intended to offer 28 blocks for bidding by foreign oil and gas companies soon.
Zohr discovery has raised foreign oil companies’ interest and attract investment potential in (offshore Egypt’s) deepwater areas.
Eni's parallel-development method has enabled it to smash records at its mega-giant Zohr gas project.
The nearly complete control room at Eni's Zohr onshore facility on the Mediterranean coast west of Port Said has all the appearances of a mission control centre for a space programme. Semi-circular consoles are arranged in front of a giant screen high up on the wall ahead. Beneath the tiled floor, workers are feeding in and connecting lines of cable—some of the 1,600 kilometres that have been installed thus far at the plant.
This building, smelling of newly applied paint and cement, will soon take charge of every single aspect of the Zohr project. It will link by radio to an unmanned control platform 85km offshore, which in turn, by means of fibre-optic cables and hydraulic and electrical lines, will set the flow of gas at the Zohr field, which is 190km north of Port Said. The Eni staff like to point out that the control platform lies 160km from the field, "the distance from Milan to Genoa".
The story of how Eni discovered a previously unknown carbonate layer under the Mediterranean in August 2015 has been told many times. Much less has been said about the process that enabled Eni to smash all existing records by bringing Zohr on stream in less than two and a half years.
The magnitude of the discovery (gas in place of at least 30 trillion cubic feet) in the Shorouk Block was obvious as soon as exploration wells had been drilled. Without delay, both Eni and the Egyptian government agreed that the find should be developed as quickly as possible. The whole project would be operated by the Belayim Petroleum Company (Petrobel), a joint venture between Eni and Egyptian General Petroleum Corporation. An execution strategy was set, leveraging the experience of Petrobel in Egypt and with the cooperation of major contractors Petrojet, Enppi, Saipem and PMS. This close coordination from day one, Eni executives say, contributed to the success of the Zohr project.
New investors
The rapid pace of development—the year-long exploration programme at the field and the simultaneous upstream-downstream work—involved huge expense. To help cover the costs, Eni adopted another aspect of its dual-exploration model: benefiting from early monetisation by the sale of minority stakes, while maintaining the operatorship. In November 2016, BP acquired a 10% stake in Zohr. Rosneft took a 30% share the following month.
US oil giant ExxonMobil announced the discovery of a significant offshore gas find in Cyprus’s Block 10
According to the preliminary interpretation of the data, the natural gas reservoir at the Glaucus-1 well is estimated between 5 trillion to 8 trillion cubic feet. ExxonMobil and partner Qatar Petroleum started drilling in block 10 of Cyprus’s exclusive economic zone (EEZ) in mid-November. Noble Energy made a significant discovery in the country's Aphrodite field in 2011, while last February, Italy’s ENI discovered Calypso in block 6, though confirmatory drilling is still pending.
Significant discoveries of gas in the Mediterranean Sea might add to the new world gas map.Now the significant gas resources found or estimated to be found in the Mediterranean Sea could be a game changer.
Prices and Rules
The elation in the region about the natural gas finds has been dampened by the current outlook for oil and gas prices. At current and expected mid-term prices, the economics of these new finds are not that promising. In addition, Israel’s stance on its domestic pricing of gas and the regulations that are being considered regarding the volumes of gas that will be available for exports have raised some concerns among the foreign operators, concerns that could also appear among operators of the newly found Egyptian gas finds if their regulations track those of Israel. The regulatory and tax frameworks are still being debated and negotiated and therefore their final design is still uncertain. In order for the Eastern Mediterranean gas discoveries to become commercially feasible, the international price of oil will probably need to return to the levels that made exploration an attractive proposition in the first place, about $80/90 per barrel.
Great! This is another good news come from Aphrodite field. All gas field make Israel more powerful and independent.
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