Gas to the East for the future of peace

Gas to the East for the future of peace

Davide Tabarelli | President and cofounder of Nomisma Energia
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To develop its energy reserves the Mena area needs stability. Following the start of the Arabs Springs in 2010, the countries in the region want to start again on the road to growth. Following the Zohr discovery Egypt seems to be leading the way in this rebirth

North Africa and the Middle East, the so-called MENA (Middle East North Africa) region, has the world’s highest concentration of energy reserves in the form of gas and oil, the sources that still account for almost 60% of global energy demand. It is also the region most in need of peace, for its 370 million inhabitants and for those in neighboring areas, especially Europe, to which those who do not wish to live in the middle of wars are escaping. At the heart of MENA is the Mediterranean, the sea for access and transit to Europe and the rest of the world, today, as it was in the past, and will be in the future. It is here that huge gas reserves were found in September 2015, namely Zohr in Egyptian waters, below Cyprus. This discovery was, in many ways, out of the ordinary.

 

A region in need of stability

The Arab Springs, which started at the end of 2010, are far in the past, and their easy initial enthusiasm has given way to a grim reality. There are many reasons as to why the area needs growth and stability and many are tied to energy, especially gas. The global demand for gas will grow rapidly in the years to come for environmental reasons, and the discovery of Zohr by Eni paves the way for its greater use in the entire region. Zohr has record reserves of 850 billion cubic meters, equal to half of those in Egypt prior to the discovery. It is located in a place where others had previously drilled; it was only by looking to the geological structures, traps, as they are known to experts, that success was found. Italian ingenuity (and luck) have therefore opened a new frontier, confirming scenarios of further large availability in the entire Mediterranean.
For Egypt, the most important country in the region, a resumption of gas exports, which had collapsed in recent years, is expected in the immediate future, both due to the fall in domestic production and due to the reduction in production of oil gas fields developed during the 80s. Egypt’s production has fallen in the last 4 years by 20%, to 46 billion cubic meters; only 10 years ago, an increase towards 80 billion was taken for granted. The fall in production has not only eliminated exports, but has also reduced domestic consumption. Exports of oil and gas are one of the conditions for bringing more economic development and therefore more stability. At current gas prices, exports from the Zohr gas field, via the already existing facilities, such as the liquefaction terminals of Damietta and Idku, could bring in €1 billion per year, with volumes sold amounting to10 billion cubic meters per year, providing enormous wealth for a country that is suffering from an internal crisis and a decline in revenue from tourism. Egypt’s internal energy demand will also
be met in a more environmentally friendly way - gas is much cleaner than coal, a considerable advantage in the polluted urban environments of large cities such as Cairo. The low gas prices do not help, which have followed the downward trend of crude oil, but they inevitably lurk near Zohr to the similar facilities that will be exploited in the coming years, possibly also leading to oil. After all, the deposits discovered below Cyprus and in Israeli waters confirm this.

 

Gas networks serve to unite

The MENA is a gas-rich, but still deeply divided region in need of good reasons to be united again, to become a civilization as it was for so long in the past. The gas networks offer a way The large volumes of gas that will be produced by the area will first be exported by ships, in the form of LNG, but the gas network projects, which are so often discussed, but for which very little is being done, need to start soon. It is still a distant dream imagining a MENA gas market consisting of a dense network of gas pipelines, but it is necessary, however, to aim, step by step, beginning with the development of Zohr.


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