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Gas Market Report 2019 2. Supply

Figure 2.30 Natural gas production, Africa, 2004–24

Egypt is expected to support over half of Africa’s natural gas production growth during the forecast period, due to strong development from the recent Zohr and West Nile Delta fields.

Egypt

Egypt’s natural gas production rose to around 58 bcm in 2018 according to early estimates. According to Petroleum Minister Tarek El-Molla, the country achieved self-sufficiency by the end of September 2018, owing to the completion of new stages to increase the production of natural gas from four major fields in the Mediterranean Sea: Zohr, Nooros, Atoll and the first and second phases of the West Nile Delta complex.

The Zohr field became in 2018 the main asset in Egypt’s natural gas production rebound, with production of about 10 bcm/y after commissioning in December 2017, on a par with the Nooros field which started operation in 2016 and reached its expected plateau level in 2018 (Figure 2.31). According to Eni, which jointly operates Zohr with the state-owned Egyptian General Petroleum Corporation (EGPC), the field is set to reach production of 2.7 billion cubic feet per day in 2019 – or around 28 bcm/y equivalent (Eni, 2019a).

Several other fields were recently developed under BP-led operations: Atoll (close to Zohr’s Shorouk offshore block), which delivered its first gas in February 2018, and the Giza and Fayoum fields in the second phase of the West Nile Delta (WND) complex in February 20199 (BP, 2019). With the expected start-up of the Raven field in late 2019, the three phases of WND are expected to deliver up to almost 15 bcm/y, equivalent to about one-quarter of Egypt’s current gas production. All the gas produced will be fed into the national gas grid.

According to the Ministry of Petroleum, Egyptian natural gas production should reach the equivalent of almost 80 bcm/y in fiscal year 2019/2010 (Daily News Egypt, 2019). Based on current projects under development, this forecast does not share the ministry’s optimistic outlook. It nevertheless expects strong growth until 2023 with a plateau of 77 bcm/y – or an average annual growth rate of 4.8% for the forecast period. However, Eni’s discovery at Nour in March 2019 (under evaluation at the time of writing, [Eni, 2019b]) may lead to further developments in the offshore Egyptian Mediterranean. In parallel the government launched a bid round in March 2019 for ten blocks in the less-explored offshore Red Sea.

9The first phase, comprising the Taurus and Libra fields, started operations in 2017.

10From July to June.

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In spite of this strong recovery in production, this forecast does not expect a full restart of LNG exports (see Chapter 4) as supplying the growing domestic need remains a priority.

Figure 2.31 Natural gas production from new fields, Egypt, 2016–19

Giza and Fayoum

40

Atoll

Zohr

20

Libra and Taurus

Nooros

0

Note: 2019 data are prospective.

Source: Compilation based on information from company reports and investor presentations.

New offshore production start-ups, led by the giant Zohr field, drive Egypt’s natural gas production recovery.

Algeria

Algerian natural gas production is expected to stagnate and even slightly decrease over the forecast period in spite of new production start-ups in 2019, due to the continuous decline of historical production.

The country’s marketed natural gas output remained stable over the recent past and even increased in 2016, but this was achieved thanks to a drastic reduction in gas reinjection – which accounted for most gross gas use until 2011 (Figure 2.32). This shift was driven by the imperative of meeting the structural rise in domestic needs (see Chapter 1) without impacting natural gas exports, which are a key source of revenues for Algeria’s economy.

This drop in reinjection is understood to have caused some damage to reservoir integrity and led to lower pressure and recovery in the Hassi R’Mel complex, the main historical contributor to Algeria’s natural gas production. It accounted for up to 75% of the country’s total gas production in the early 2000s. State-owned operator Sonatrach announced investment to prevent further decline, which is due to be completed in 2020.

New production assets have recently started production as part of the 9 bcm/y Southwest Gas project to counterbalance this decline: the Reggane and Timimoun fields both delivered their first gas in 2018, and the project’s third and largest element, the 4.5 bcm/y Touat field, is expected to start deliveries by mid-2019.

However, the outlook remains uncertain in the absence of further announced developments to limit production decline over the medium term. This lack of production growth, combined with the expected continuous increase in domestic demand, has led to some concerns over Algeria’s

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