Egypt's Zohr Gas Re-Writes Israel's Happy Ending

Egypt's Zohr Gas Re-Writes Israel's Happy Ending
Egypt's historic gas discovery threatens to sink Israel's fledgling gas export bonanza, which was counting on deals with Cairo to get it off the ground.

Reuters

JERUSALEM/CAIRO, Aug 31 (Reuters) - Egypt's historic gas discovery threatens to sink Israel's fledgling gas export bonanza, which was counting on deals with Cairo to get it off the ground.

Italian oil company Eni stunned markets on Sunday after declaring the Mediterranean's biggest-ever and the world's 20th largest gas discovery off Egyptian waters, in the Zohr field holding an estimated 30 trillion cubic feet (tcf) of gas.

Zohr jeopardizes lucrative deals being negotiated between Israeli companies and their Western counterparts operating in Egypt, which may now no longer need to import.

Shares in U.S. based Noble Energy, which is developing Israel's biggest gas field Leviathan with Israeli energy companies, fell 7.1 percent at $32.08 in New York.

Israel's top energy firms, including Delek Group, Avner Oil and Ratio, saw 4.5 billion shekels ($1.14 billion) wiped off their market capitalisation on Monday.

"It's a bit early to assess the quality of the data and their significance, but if they are accurate, the discovery off Egypt's coast is bad news for the Israeli economy and the companies holding the (gas) assets in particular," said Eldad Tamir, chief executive of Israel investment house Tamir Fishman.

Zohr reserves will be direct competitors to the Israeli projects, potentially driving down prices along with profit margins, he said.


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