On 31 Jan., 2018, President Abdel Fattah Al-Sisi inaugurated the giant Zohr field project at Port Said, the largest gas discovery in Egypt and the Mediterranean region. The field represents a great addition to reinforce Egypt's natural gas reserves and production, contributing to the domestic gas market requirements provision, along with pumping new investments into the Egyptian Petroleum Sector.
The ceremony was attended by Eng. Sherif Ismail, Prime Minister, a number of Ministers, Governors of Port Said, Ismailia, Suez, Damietta, Members of the Parliament of Port Said, Suez and Damietta Governorates, Chairman of the Energy Committee, Head of Egypt Support Coalition, Petroleum Sector leaderships & Claudio Deskalzi, CEO of ENI and leaderships of ENI, BP and Rosneft companies.
At the beginning, Eng. Tarek el Molla, Minister of Petroleum and Mineral Resources reviewed the most important challenges confronted by the Petroleum Sector during the period 2011-2013, which had a negative impact on the Egyptian economy. The most important of which were the cessation of issuing new petroleum agreements and the accumulated arrears of foreign companies, which reached $6.3 billion, that led to a slowdown in exploration investments and a decrease in oil and gas production. This resulted in a gap increase between domestic supply and demand for gas and a decrease in gas supplies to factories, which affected its production, negatively. In addition to the crises and bottlenecks in the petroleum products market.
El-Molla pointed to the success of the Petroleum Sector in facing these challenges and overcoming them after the revolution of June 30, as a result of restoring political and security stability, reducing foreign partner's arrears and signing new petroleum agreements which reached 83 till now, representing the main factor of increasing production and reserves through intensive upstream activities. This had various outcome, the most important of which is Zohr discovery, as well as accelerating the development of new discovered gas fields, such as North Alexandria, Atoll and Nooros, besides projects of revamping and modernizing infrastructure, refineries and petrochemical projects.
That’s in addition to energy subsidy reform, which the government is committed to implement within a period of five years, in parallel with social protection steps taken in order to deliver subsidy to those who actually deserve it.
The Minister of Petroleum reviewed the development steps of the project since the signing of the agreement of Shorouk offshore concession in the deep waters of the Mediterranean region in January 2014 with Italy's ENI. In August 2015, the commercial discovery was announced with reserves estimated at 30 trillion cubic feet, located at 190 kilometers from the coast and at a depth of 4130 meters.
In his speech, the Minister stressed that the success of the project’s completion in a time record, is due to the continuous and accurate follow-up as well as the full support of President Al-Sisi and coordination of Eni with its new partners in the project (BP and Roseneft) as it took 28 months since discovery to the first production startup. In fact, the project represents a unique achievement compared to similar discoveries worldwide, which, normally, takes 6-8 years, in addition to the huge investment of the project, reaching $ 12 billion. The Minister added that, other factors has led to this success story, on top of which; the formation of a high steering committee to keep following up the phases implementation along with establishing a new joint venture company with the Italian company ENI, (Petroshrouk) pointing out that this project requires high & advanced technology, together with specialized and well experienced work techniques. Actually, the joint efforts of the Petroleum Sector and its companies as well as the Italian company Eni, has led to the implementation of the project according to the planned time schedule as this achievement is a radical shift in the Egyptian energy sector, redefining concepts of the international gas industry and confirms Egypt's ability to realize this achievement.
Eng. Tarek El-Molla marked out that the pilot operation of the first phase of the project started in December 2017 at a rate of 350 million cubic feet of gas per day amounting to more than one billion cubic feet of gas per day before the middle of 2018 and rising to 1.7 billion cubic feet per day by the end of the year. In addition, with the development phases completion, production will reach 2.7 billion cubic feet per day by the end of 2019, representing 50% of Egypt's gas production.
The Minister has reviewed the offshore works, carried out in the project, which included the implementation of a production transmission pipelines network and installation of the control platform and head wells. Moreover, he reviewed the project's onshore works, which included the establishment of a gas treatment plant with a capacity of 2800 million cubic feet of gas per day and the implementation of a gas pipeline to pump the produced gas into the national gas grid.
Eng. Tarek El Molla clarified the significance of Zohr gas field project to the Egyptian economy, represented in attracting more investments and opening new horizons for exploration in the Mediterranean , especially in deep waters , to stimulate international companies to intensify exploration activities in neighboring areas . In addition, the giant field will increase Egypt's natural gas production. He declared that the total production of Zohr field is directed to the domestic consumption, contributing to covering the State's different economic sectors requirements.
He pointed out that the first production phase of the project (350 million cubic feet of gas per day) will cut imports of LNG by 25% and will save about $ 60 million per month i.e. $ 720 million annually. Moreover, by the end of 2018, self-sufficiency will increase savings to $250 million per month equivalent to $3 billion a year, leading to foreign exchange provision, in addition to availing many direct and indirect job opportunities.
El Molla marked out that the project represents a practical application of the State's policy in maximizing the local component in major projects. The Egyptian oil companies joined efforts in the engineering design and implementation works of manufacturing, installation and construction, led by Enppi, Petrojet and Marine Oil Services, in addition to several other national private sector companies working under the authority of (Petrobel Co.) the operator .
On the other hand, the Minister reviewed the community development services carried out by the oil companies operating in Port Said Governorate, which include the development of the family medical unit in the village of Al-Garabaa, as well as a program for raising the skills and improvement of the villages' youth. Moreover, the care presented to the main domains of health care and activities related to fish trade. He pointed out that to ensure sustainability and continuity of these projects implementation in the villages surrounding the project, the returns of selling the extracted Sulfur from Zohr gas field (estimated with one Million dollars a year), will be allocated to financing these projects.