Israeli energy stocks drop after Egyptian giant gas field discover

Israeli energy shares fell yesterday a day after Italian energy group Eni SpA announced the discovery of what is potentially the largest natural gas field in the Mediterranean off the coast of Egypt.

Israeli media described yesterday as a black day for Tel Aviv’s energy shares.

Israel’s the Marker magazine reported that the stock exchange index for oil and gas was down 7.6 per cent.

In a statement, Eni SpA said the newly discovered field could potentially hold 30 trillion cubic feet (850 billion cubic metres) of gas in an area of about 100 square kilometres (40 square miles).

“It’s the largest gas discovery ever made in Egypt and in the Mediterranean Sea and could become one of the world’s largest natural-gas finds,” the firm said. The field is located at a depth of 4,757 feet (1,450 metres) in the Shorouk Block.

If the estimates are correct, the Zohr gas field would be significantly larger than Israel’s biggest field Leviathan, which is approximately 621 billion cubic metres.

In response to Eni’s announcement, Israel’s Energy Minister Yuval Steinitz said that the discovery of the gas field in Egypt’s territorial waters should act as a wake-up call for Israel to finalise an agreement on its own sizable reserves in the Mediterranean Sea.

“The discovery of the huge gas field in Egypt is a painful reminder that while Israel wastes time with the final approval for the gas road map, and delays the processes, the world is changing before our eyes, including ramifications for Israeli export options,” Steinitz told Army Radio.

“We must approve the gas road map and strengthen the Israeli gas industry,” he said referring to a cabinet-backed deal to develop Israel’s Tamar and Leviathan reserves.

Avi Bar-Eli, an analyst at Israel’s Haaretz newspaper, said the discovery could harm the chances to develop Israel’s own Leviathan field on time, due to the fact that Egypt was supposed to be a major customer for the gas.

However, Member of the Knesset Shelly Yachimovich of the Zionist Union, who opposes Israeli gas companies and the government’s actions, said the discoveries prove that advancing Israel’s gas outline is not an issue of national security.

“It turns out that Egypt does not need our gas, and the government must now require the creation of a logical and sane outline, without fictitious panic and imaginary security explanations,” Yachimovich said.