LNG

Egypt’s Petroleum and Mineral Resources Minister Tareq El-Molla has said that Egypt was ready to meet more of the increased demand for natural gas in Europe as its LNG exports have increased to 8 million tonnes per annum in 2022 and the capacity is there for growth in 2023.

“Efforts exerted over the past years have made of Egypt one of the solutions to the ongoing energy problem,” said the Minister in a keynote speech to the eighth Egypt Oil and Gas Convention on November 27 in Cairo.

The convention was taking place at the Dusit Thani Lakeview Hotel in the Egyptian capital through November 29.

El-Molla noted that Egypt had the capacity to export up to 12 MTPA of LNG annually from the two plants located east of the Mediterranean city of Alexandria.

He said that out of the total of LNG cargo exports from the Idku LNG plant and the Damietta facility about 90 percent were delivered to Europe.

He noted that the successes of the petroleum sector in Egypt was due to the integrated strategy of partnerships between the public and private sectors and was fully supported by the government of President Abdel Fattah El-Sisi.

“The petroleum sector is also seeking mechanisms of action that would maximize cooperation with international partners to be able to make optimal use of our natural resources,” said the Minister.

The Minister said that the strategy rested on increasing and sustaining oil and natural gas production while also reducing carbon emissions.

Feed-gas boosted

Egypt is set to increase LNG supplies by almost 30 percent this year compared with the 6.1MT shipped in 2021 as feed-gas supplies have stabilised.

The Minister added that Egypt's revenues from the exports of LNG, petrochemicals and petroleum products would amount in 2022 to $19 billion.

He said that Egypt was working towards developing energy sources of all kinds simultaneously, be they traditional energy sources, especially natural gas, or renewable sources like solar energy and wind.

Egypt’s previous natural gas shortages were solved by Eni’s Zohr gas field discovery in the East Med and other gas finds in the nation’s extensive oil and gas basins leading to a re-start of the Damietta LNG plant in February 2021 after it had been idle since the end of 2012.

The Egyptian domestic natural gas market also receives pipeline gas from Israel.

The Damietta facility has as its shareholders the Italian energy company Eni as well as two of Egypt’s state-owned companies, Egyptian Natural Gas Holding Company (EGAS) and Egyptian General Petroleum Corp. (EGPC).

The facility has nameplate capacity of 5 MTPA and with Eni owning 50 percent of the plant while EGAS and EGPC hold 40 percent and 10 percent respectively.

The second Egyptian plant, the Idku facility, has 7.2 MTPA of capacity from two Trains and is operated by Shell.

Egypt has signed an agreement to increase natural gas production and LNG exports from its two liquefaction plants east of Alexandria to European customers and specifically Italy.

The Gas Exporting Countries Forum (GECF), the OPEC of natural gas and LNG based in Qatar, has published its Annual Outlook outlining supply and demand forecasts and expects total upstream and midstream investments to reach $8.7 trillion by 2050.

In its sixth edition, the Outlook finds that natural gas can become the fuel of choice in satisfying the growing world energy needs, addressing climate change and improving air quality.

“The GECF Global Gas Outlook 2050 underscores that investment in natural gas is critical for the stability of global energy systems,” declared Mohamed Hamel, Secretary General of the GECF.

“Environmental policies are a key driver of the projections contained in the Outlook. In this context, whilst upholding that natural gas is the cleanest of hydrocarbon fuels, the Outlook explores the state of technologies that will make it even cleaner,” added Hamel.

The GECF comprises 19 countries who together represent 71 percent of the world’s proven gas reserves, 43 percent of its marketed production, 52 percent of pipeline gas and 58 percent of LNG exports.

Asia-Pacific demand

“Global energy demand will rise by 29 percent over the next three decades, with the majority of that increase emanating from growing economies in Asia Pacific and Africa,” said the report.

“Natural gas demand will rise by 46 percent from 3,840 billion cubic metres in 2020 to 5,625 Bcm in 2050. The Asia-Pacific region will represent the largest growth share,” it added.

“The power generation sector will take a frontline place, accounting for 42 percent of the total increase in gas demand. The transport sector and blue hydrogen generation will emerge as significant new areas of gas demand expansion,” stated the GECF.

The Middle East, principally Qatar, will deliver 32 percent of the global gas supply increase and there will be a growing role for deepwater and unconventional natural gas resource developments to meet demand.

The global gas trade is forecast to increase by 45 percent by 2050 and become more integrated and interrelated through LNG expansion.

Trade in natural gas is seen expanding by 1.5 percent per annum between 2020 and 2050 to reach 1,815 Bcm and account for a third of global gas demand.

The report forecasts that LNG will overtake pipeline trade around 2030 to reach 845 million tonnes (1,150 Bcm).

The GECF has 11 full members, including seven LNG producers: Algeria, Egypt, Equatorial Guinea, Nigeria, Qatar, Russia, Trinidad and Tobago, along with pipeline producers Bolivia, Iran, Libya and Venezuela.

It also has eight observer-status member countries. They include five LNG nations: Angola, Malaysia, Norway, Peru and the United Arab Emirates, along with Azerbaijan, Iraq, and Kazakhstan.

Italian energy company Eni has outlined a project to expand natural gas treatment facilities in Egypt connected to the Western Desert Gas Complex in the port of Alexandria to further tap the region's gas reserves.

The expansion of natural gas facilities coincided with an agreement with the Government of Egypt, the Egyptian General Petroleum Corp.(EGPC) and Russian oil company Lukoil for the merger of the concessions of Meleiha and Meleiha Deep, in Egypt's Western Desert, and their extension to 2036.

The extension of the Meleiha concession time also has the possibility of reaching out to a further timeline of 2041.

“The agreement, which marks another important result for Eni in the prolific basin of the Egyptian Western Desert, will unlock, through enhanced contractual terms, the area’s considerable resources,” explained Eni.

“The company will leverage the skills of local contractors already involved in the implementation of important projects in Egypt, including the fast-track development of the giant Zohr gas field,” said Eni.

Before the bringing on stream of the Zohr field in the East Mediterranean in 2017, Egypt had been forced to import LNG from 2015 in two floating storage and regasification units deployed at Ain Sokhna in the Gulf of Suez.

The Egyptians halted LNG imports two years ago and have now started regular exports of LNG from their two liquefaction facilities at Idku and Damietta, east of the port of Alexandria.

The Idku LNG export plant has been on stream again since 2017 under the operatorship of Royal Dutch Shell, which acquired original operator BG Group.

The Damietta facility only re-started operations and exports in February 2021.

With Damietta back on stream, Egypt added 4.5 million tonnes per annum of LNG output to its export volumes now totalling 12.5 MTPA.

The Milan-based major has completed a high-resolution 3D seismic acquisition of the Meleiha blocks ahead of intensive exploration and a development drilling campaign in the Meleiha and Meleiha Deep concessions.

The concessions are operated by Agiba, the 50-50 joint venture between Eni and EGPC through an Eni subsidiary that holds a 76 percent interest in the concessions, while Lukoil holds a 24 percent interest. 

Egypt plans to construct a $7.5-billion petrochemicals, energy and bunkering complex at Ain Sokhna in the Gulf of Suex where it previously imported LNG during the era of natural gas shortages before the Zohr gas field and other discoveries were made in the Eastern Mediterranean and the Nile Basin.

The Egyptian government said the facility would be constructed on a 3.65 million square metres site and is the latest instalment in the country’s comeback story as an LNG exporter and now with plans to build its East Med energy hub.

The deal to develop the complex is between the Red Sea National Refining and Petrochemicals Company and the Suez Canal Economic Zone's development company. They aim to produce value-added petroleum products to fill Egypt's domestic needs and enable exports.

“The products include polyethylene, polypropylene, polyester, bunkering fuel and other petroleum and chemical products,” said a statement.

Egypt’s gas crisis during the “Arab Spring” social upheavals in North Africa and the Middle East in 2014 led to the diversion of natural gas supplies away from LNG production to meet growing domestic demand and to avoid power cuts.

The Gulf of Suez is a main transit point for global shipping and the development of bunkering will be part of the business.

Before the bringing on stream of the Zohr field in the East Med in 2017, Egypt had been forced to import LNG from 2015 in two floating storage and regasification units deployed at Ain Sokhna.

The Egyptians halted LNG imports two years ago and have now started regular exports of LNG from their two liquefaction facilities at Idku and Damietta, east of the port of Alexandria.

The Idku LNG export plant has been on stream again since 2017 under the operatorship of Royal Dutch Shell, which acquired original operator BG Group.

The Damietta facility only re-started operations and exports in February 2021.

With Damietta back on stream, Egypt added 4.5 million tonnes per annum of LNG output to its export volumes now totalling 12.5 MTPA.

The move forward for Damietta came after the resolution of  a long-standing dispute between the shareholders over contracts because of the closure.

Naturgy Energy, the Spain-based European utility, agreed to sell its stake in the Damietta plant and to rescind its Egyptian gas contracts on departing from the Unión Fenosa Gas (UFG) joint venture.

Naturgy’s UFG partners, Italian Eni company and the Egyptian Natural Gas Holding Company (Egas), reached the agreement under which Naturgy received a series of payments adding up to US$600 million.

Eni has taken over the contract for the purchase of natural gas for the LNG plant and receives corresponding liquefaction rights.

ExxonMobil Corp, the US major with some of the largest LNG production and project stakes in Qatar and elsewhere, has acquired more than 1.7 million acres offshore Egypt where large natural gas finds such as the East Mediterranean Zohr field have been made in recent years.

Egypt said its rising natural gas surplus through 2020 would be used to satisfy demand from the power and industry sectors and to meet LNG export obligations as its overall output reaches more than 5 billion cubic feet per day.

The Egyptian Petroleum and Mineral Resources Minister, Tarek El Molla, addressed the nation’s natural gas output targets at a World Economic Forum meeting held at a Dead Sea resort at southern Shuneh in Jordan.

El Molla said he was pleased with the output from Egypt’s natural gas fields on the West Nile Delta, at Noor in North Sinai, the Atoll field in the East Nile Delta and the giant Zohr resources in the East Mediterranean.

The Minister noted that Egypt had recently launched an international tender for new exploration licences in 10 areas of the Red Sea where it would also have cooperation from Saudi Arabia.

El Molla held talks with his Saudi counterpart Khaled el Faleh on means of boosting joint cooperation.

“The two ministers exchanged views on opportunities of oil and gas exploration in the Red Sea and means of intensifying search and exploration operations in the coming phase,” said a statement.

At the same time the Egyptian minister said the nation was pursuing LNG exports from the Idku liquefaction plant near Alexandria, which resumed in 2017, and was also set to restart production at the nearby Damietta LNG facility.

“We are exporting 1.1 billion cubic feet per day and we expect that by the end of the year this figure will go up to 2 bcf per day, and this is when we resume the operation of the Damietta plant,” said El Molla.

“The second plant is expected to operate within this year,” added the Minister.

On the Red Sea tenders, interested companies have been given until August to submit their bids for the 10 licences to be issued on the production-sharing model and covering an area of 3,000 square kilometres.

“We are preparing to become an energy hub as everybody knows we have a fantastic geographical location between the Red Sea and the Mediterranean,” said El Molla.

“We also have important infrastructure, the Suez Canal, LNG plants in Damietta and Port Said, refineries on two coasts and the Sumed pipeline running from the Gulf of Suez to offshore Alexandria,” he explained.

“For example, we’ve signed agreements with Cyprus to bring their gas here, whether for our domestic use or to export on their behalf through our LNG facilities. There’s an opportunity to do the same with any other gas in the Eastern Mediterranean basin,” added the minister.

The start of production at the Zohr field by Italian energy company Eni in 2016 transformed the country from being an importer to again being an exporter.

As regards its import facilities in the form of two floating storage and regasification units (FSRUs) deployed at the port of Ain Sokhna in the Gulf of Suez, one FSRU would continue to be in operation for strategic reasons.

“The regasification plant, which is the FSRU standing at Ain Sokhna, is going to be there for strategic reasons but on idle mode,” he added.