Italian energy giant Eni SpA (NYSE:E) has discovered what might be the largest natural gas field in the world, according to an e-mail report on Sunday.
The “supergiant” find, which may contain as much as 30 trillion cubic meters of natural gas at a depth of 1.45 kilometers, was discovered off the Mediterranean coast of Egypt. (Source: CNBC, last accessed August 31, 2015.)
Such a large quantity of natural gas could potentially feed not only Egypt’s but also the wider region’s energy appetites for decades, not to mention nudge the geopolitical balance towards stability.
Chief Executive Officer Claudio Descalzi was unable to give a definitive timeline as to when the gas would hit the market, but said development would be faster than usual given the proximity to ENI’s gas processing facilities. (Source: Bloomberg, last accessed August 31, 2015.)
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“Egypt has still great potential,” he said in the statement. “This historic discovery” will transform the energy industry in Egypt.
ENI enjoys partial support from the Italian state, and has a market cap of approximately 54 billion euros. Operating in Egypt for more than six decades through its local subsidiary IEOC, ENI is the largest foreign energy producer in Africa.
The Rome-based company signed a $2.0 billion energy deal with Egypt’s oil ministry in June, granting it exploration and—in the event of discovery—production rights in the Sinai, Gulf of Suez, and off the Nile Delta and northern coast. (Source: Reuters, August 31, 2015.)
The discovery could not have come at a better time for ENI, which has been suffering due to low energy prices and market volatility for the past 12 months. The Italian company had previously been forced to cut its dividend, as well as announcing budget cuts of 17% for the period 2015-2018. (Source: CNBC, last accessed August 31, 2015.)
This latest discovery gives fresh momentum to ENI, as it hopes to profit on recently raised environmental targets for emissions. If the company can weather the current low price environment and develop this field as the price of natural gas rises, it will be well positioned.
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