Capitalizing on Zohr, EU, Egypt sign MoU on strategic energy cooperation

© European Union, 2018/Photo: Pedro Costa Gomes

(L-R) Egypt’s Electricity and Renewable Energy Minister Mohamed Shaker, EU Climate Action and Energy Commissioner Miguel Arias Cañete and Egypt’s Petroleum and Mineral Resources Minister Tarek al-Molla after the signing of a an MoU, April 23, 2018.

Without a hub the East Med will struggle to export its gas


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The European Union and Egypt have signed a Memorandum of Understanding (MoU) for a strategic partnership on energy.

Egypt’s Electricity and Renewable Energy Minister Mohamed Shaker, Petroleum and Mineral Resources Minister Tarek al-Molla, and EU Climate Action and Energy Commissioner Miguel Arias Cañete signed the MoU during the latter’s official visit to Egypt on April 23.

Cyprus Natural Hydrocarbons Company CEO Charles Ellinas reminded that the Egyptian government approved in August 2017 a new gas law liberalising and opening its natural gas sector to private investors. “This has the potential to turn Egypt into a regional gas hub and open the way to develop and export the East Med’s natural gas resources,” Ellinas told New Europe, adding that Egypt has an ideal location, with the Suez canal connecting Asia and East Africa to Europe, while facilitating the transportation of oil, products and liquefied natural gas (LNG), with a real potential to become the region’s energy hub. “Without a hub, the East Med will struggle to export its gas,” he said, noting that long-distance pipelines face commercial challenges and lack of flexibility regarding the destination.

“Israeli and Cypriot gas finds, and potential gas reservoirs off Lebanon, could create a gas hub right on Europe’s doorstep. But trying to figure out how best to develop this gas is fraught with commercial and geopolitical challenges,” Ellinas said.

According to the European Commission, the visit was a key part of the external dimension of the Energy Union, a political priority of the Juncker Commission. Cañete was accompanied by an EU delegation including Dominique Ristori, the Director General of the Directorate-General for Energy within the European Commission.

“The EU and Egypt are strategic partners on energy,” Cañete said ahead of his visit, adding that the potential for even closer energy cooperation between the EU and Egypt is enormous.

“Egypt can lead the way of the clean energy transition in the Eastern Mediterranean and thus contribute to the Paris climate goals and worldwide decarbonisation effort. Likewise, Egypt is becoming an important gas and electricity hub that can provide energy security for the EU and for the entire region. There is much to gain in terms of access to new sources of energy and market opportunities, for European and Egyptian citizens and businesses alike,” Cañete said, adding that the EU stands ready to support Egypt in its energy market reforms and to boost sustainable energy investment.

During his stay in Egypt, Cañete visited the Zohr onshore gas processing facilities where he praised the efforts made to implement the giant Zohr offshore gas field project, discovered by Italian energy major ENI.

Ellinas told New Europe that Egypt is well on the way to self-sufficiency by the end of 2018 and LNG exports by 2019, due to Zohr and other newly developed gas-fields, and its use of existing low-cost liquefaction plants at Idku and Damietta, with most of the LNG destined for Europe through existing contracts.

“Whatever happens with gas from Israel and Cyprus, which is commercially challenged, Egypt has the potential to go it alone in terms of gas exports by 2019,” Ellinas said. He noted, however, that a major discovery in Cyprus’ Block 10 by US energy major ExxonMobil later this year could alter the gas balance and associated geopolitics in the region.

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