Egypt to increase LNG exports to Europe with Eni
Eni signs agreement to supply more of our LNG to Italy, Europe: The Italian energy firm yesterday signed an agreement in Cairo with the state-owned Egyptian Natural Gas Holding Company (EGAS) designed to “maximize” Egyptian LNG exports to Europe and boost Eni’s gas production here, according to a cabinet statement.
“The agreement aims to promote Egyptian gas export to Europe, and specifically to Italy, in the context of the transition to a low carbon economy,” Eni said in a statement.
The details: The agreement will see production increase at the two companies’ gas joint ventures; redouble Eni’s exploration efforts in its newly-acquired concessions in the Western Desert, the Nile Delta and Mediterranean; and “identify [how to] to maximize short-term gas production,” Eni said. Along with the reopening of the Damietta LNG plant last year — which Eni runs and in which it holds a 50% stake — yesterday’s agreement will boost the Italian firm’s LNG exports to Italy and elsewhere in Europe to 3 bn cubic meters this year.
We had an inkling this was coming: Eni in March pledged to bring more than 14 trn cubic feet of additional gas to the global market and mitigate Europe’s energy crisis by “leveraging established alliances with producing countries,” including Egypt.
Why now? Europe is looking to wean itself off Russian energy amid the fallout from war in Ukraine, which may soon see the bloc ban Russian oil altogether. We’re a strong option given our prime location just across the Med; our 2018 discovery of the largest gas field in the region; two operating liquefaction plants; and a pact to bring in Israeli gas from our neighbours’ massive offshore fields. Egyptian gas is usually snapped up by Asian buyers, but shipments to Europe rocketed last year to more than 2 mn metric tons, up from just 270k the year before. And discussions on accelerating that trend have intensified with the war’s outbreak — top EU official Frans Timmermans just days ago told Prime Minister Mostafa Madbouly that the bloc is looking to up its imports of liquefied natural gas (LNG) from Egypt in the short term.
Italy is also tapping our neighbors in the region for more gas: The country’s prime minister was in Algeria on Tuesday to sign an agreement upping its purchases of Algerian fuel, Bloomberg reports. Eni — which is majority state-owned — is also trying to ramp up production in Libya, as well as in several African and Southeast Asian countries in which it operates.
This may be easier said than done: Ramping up production has proved difficult for some of our oil-producing neighbors in the OPEC+ cartel amid snarled supply chains and staffing issues. Meanwhile, Oil Minister Tarek El Molla said late last year that Egypt’s LNG terminals were running at maximum capacity, as the country tries to capitalize on the surge in natural gas prices overseas.
But Eni is well placed to help: The company has been operating in Egypt for decades, and its involvement in both gas production and liquefaction, combined with its European ties, means it can work to both up supply and facilitate exports.
And the firm has been very active in our energy sector lately: It was awarded fresh gas exploration blocks in the 2021 bid round, has committed to spend at least USD 1 bn to develop some of its local concessions, and could also partner with us on carbon capture and green hydrogen projects in the run up to COP 27. Eni also today announced fresh discoveries totaling 8.5k barrels of oil-equivalent per day in its Meleiha concessions in the Western Desert.