Zohr could come onstream by 2018, with Egyptian President Abdel Fattah Al-Sisi agreeing to remove any political obstacles to Eni commercializing the field.
GlobalData believes the project will yield an internal rate of return of 25%, assuming a flat gas price of $5.88/1,000 cf, with recoverable reserves of 22 tcf justifying a fasttrack development.
The consultant assumes an initial production rate of 50 MMcf/d, consistent with other producing wells nearby, and anticipates Eni bringing online eight wells annually through 2026. At that point, output would reach a peak of 3,052 MMcf/d.
GlobalData foresees base capex for the project of $7.69 billion, compared with $8.9 billion for the Leviathan operated gas field development offshore Israel which has 12.5 tcf estimated recoverable.
Matthew Jurecky, GlobalData’s head of oil & gas research and consulting, said: “Reduced exploration risk and the potential to share infrastructure could see the eastern Mediterranean blossom into a key development area for international oil companies.
“With the resource potential more clearly established, above-ground issues, such as political challenges and collaboration between operators, become key.”
Lydia Pearson, GlobalData’s upstream oil & gas analyst saw reasons for other nations in the east Mediterranean to be optimistic going forward.
“In Cyprus, a route to commercialization for the 4-tcf Aphrodite field has yet to be found. A proposed floating liquefied natural gas facility has struggled with commerciality, but leveraging scale and infrastructure with Zohr would boost returns and mitigate risk at both projects.
“In Israel, GlobalData estimates Tanin and Karish to have poor project economics, hovering around a full-cycle value of negative $1 billion when considered as standalone projects. However, if a regional gas hub were developed, these projects would yield much more favorable economics.”
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