The Egyptian government last week approved exploratory drilling by Italian company Eni in the area of the Nur natural gas field off the northern Sinai coast. The drilling, scheduled in August, will cost an estimated $105 million, according to an announcement by a spokesperson of the Egyptian Ministry of Petroleum reported last Thursday by Reuters.
According to unverified and unofficial reports in the Egyptian media last week, the Nur gas field is likely to include huge quantities of gas - triple the amount of gas in Egypt's Zohr gas reservoir. Eni did not confirm that a discovery had been made and did not report what quantities of gas it expects to find in the Nur field. The company is currently conducting seismic surveys slated for completion in several weeks.
The shares linked to natural gas responded to the news in a typically extreme way. The declines were accompanied by statements by analysts that if the reports are true, exports of gas from Israel are liable to be affected. At the same time, there has been quite a lot of criticism that that purposed discovery is no more than rumors and conclusions should not be drawn about the size of the reservoir at such an early stage of exploration, even before exploratory drilling.
Can the size of the reservoir be deduced solely on the basis of seismic surveys? It depends on whom you ask. Yossi Langotsky, the geologist behind the Tamar discovery, says, "The distance of only a few dozen kilometer between Nur and the Zohr reservoir (discovered by ENI in 2015, S.G.) enables the company to draw conclusions with a very high likelihood on the basis of seismic surveys along."
Langotsky explains, "Eni has the opportunity to compare the surveys it carried out at Zohr three years ago with the Nur surveys. The question is whether the source for the Egyptian reports is in Eni, in which case the probability that the company is accurate can really be very high."
It should be kept in mind, however, that Langotsky was among the main opponents of the natural gas plan. He believes more gas discovered outside Israel will improve Israel's economy, because more gas will remain for future generations.
Amir Foster, on the other hand, head of strategy and research at Association of Oil and Gas Exploration Industries in Israel, to which the partners in the Tamar and Leviathan natural gas reservoirs belong, said last week, "One of the basic things in gas exploration is that in order to find gas, you have to drill. An announcement of a natural gas discovery can take place only after drilling is carried out. This is elementary - you can't discover gas if you don't drill in the ground. It's amazing to see time after time how the reality differs from newspaper headlines.
"In a conversation I had with professional Egyptian sources, it was clear to everyone that the 'reports' of a major discovery in Egypt were unfounded. There is no discovery or even signs of a discovery; not even one exploratory drilling has been made.
"In any case, it was clear in talks that recovery in the Egyptian economy is bringing with it a large increase in demand for natural gas in the country; a jump in demand is projected. As I have already written before, the many gas discoveries in the region are strengthening Egypt's vision of becoming a regional hub that will facilitate a flow of local liquefied natural gas, both Egyptian and Israeli, to every area of the world. The two sides are partners in this vision.
Published by Globes [online], Israel business news - www.globes-online.com - on July 1, 2018
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