Oil and Gas Eastern Mediterranean
T
he Mediterranean is very strategic in linking trading routes with West Asia, North Africa and South Europe. In the next few years the nature of trading will change as the battle for gas supremacy grows. Egypt and Israel are vying to be the regional gas hub competing for export markets. Cyprus is the smallest of the countries with three major discoveries. Could the Eastern Mediterranean play a role in Europe’s energy transition process? More importantly, could gas from Cyprus or Israel compete against Russian gas and strengthen Europe’s energy security?
Discoveries Within the past decade there have been significant gas discoveries in the waters of the Eastern Mediterranean. Following 20 years of exploration off the coast of Israel, the Tamar and Leviathan fields were discovered with an estimated 600Bcm and 370Bcm respectively. In 2015 Eni led a discovery at the prolific Zohar field offshore Egypt, with an estimated 800Bcm. Again, in
Cyprus Eni discovered gas at the Calypso field, with an estimated 200Bcm. With Aphrodite already discovered by Noble Energy in 2011 at 130Bcm, and the 2019 ExxonMobil Glaucus discovery, this puts the tiny nation of 1.2 million people in a favourable position for gas exports.
European gas markets Europe’s changing energy mix is driven by its energy transition policies, which are aimed at decarbonisation – generating energy from cleaner sources such as natural gas, nuclear and renewables. The EU and its members are committed to the Paris Agreement, which seeks to contain rising temperatures within the 1.5 ºC degree limit. Natural gas and, by extension, LNG are set to play a more prominent role in the energy mix. According to the Oxford Institute for Energy Studies, the market share of natural gas increased from 10% in the 1970s to about 24% in 2012, with a 4% CAGR. The study showed that 35 European countries consumed 530Bcm, or 15.6% of world consumption. Germany led at 87.2Bcm, followed by the UK at 78.1Bcm and Italy at
24% The market share of natural gas increased from 10% in the 1970s to about 24% in 2012 74.9Bcm. Consumption is largely concentrated in Northwest Europe, segmented by end use as follows: residential and commercial sector at 35.1%, power at 34.2% and industry at 20.3%. LNG is also playing a growing role in transport. According to the Shell LNG Outlook 2019, the number of LNG trucks grew from 1,532 in 2016 to 5,500 in 2018. It forecasts 250,000 trucks by 2030. The supply side is also undergoing changes. One third of supply comes from domestic sources and two thirds from imports (Russia, Qatar, Algeria and the US). Declining domestic production is putting more pressure on imports and
Shaking up
Europe’s energy map Randall Mohammed at Global Energy 4.0 looks at how natural gas discoveries in the Mediterranean Sea are shaking up Europe’s energy politics
24 energyfocus | www.the-eic.com
24-25 OG Egypt_Winter 2020_Energy Focus 24
05/02/2020 09:05
