Buzz of Big Egyptian Gas Find Belatedly Sends Israeli Energy Shares Tumbling

A report that an Italian energy giant is teaming up with Egypt to explore a large undersea gas field in the Mediterranean, published Saturday on the Egypt Independent website sent Israeli Egypt shares sharply lower on Wednesday.

Israeli "gas shares" were down about 4 percent on the Tel Aviv Stock Exchange in mid-day trading.

The report originated with sources from Egypt's Ministry of Oil saying on Saturday that the ministry broached exploration plans for Noor, a gas field in the submarine concession Shorok, with the Italian multinational company Eni.

With an estimated 2.5 trillion cubic meters of gas, Noor may be among the world's largest gas fields, the site reported.

Even before the Egypt Independent report on Noor, a company named Mubadala Petroleum, part of Abu Dhabi's sovereign fund Mubadala Development, acquired a 10% stake in Shorok, which aside from Noor, has a second gas field, Zohr.

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Following that deal, ENI owns 50% of the rights in Noor, through its subsidiary IEOC. The international energy giant BP owns 10% of the rights, Russia's Rozneft owns 30% and now Mubdala owns 10%.

Israeli energy investors might be concerned that developing Noor could stymie plans by Israeli companies to export gas extracted from in Tamar and Leviathan, two fields in Israeli territorial waters in the Mediterranean.

The "actual" size of any gas field is debatable, because not least because there is also a question of feasibility of extraction when the gas supply starts to run low, for instance. That said, as of the latest reckoning Leviathan is thought to have about 0.6 trillion cubic meters of gas – a quarter of Noor's size.

Leviathan isn't productive yet. Its development is planned to take place in two stages. At first the plan is to produce 1.2 billion cubic meters a year, starting in late 2019. The gas would be sold to Israeli clients and to the Jordanian electric company NEPCO.

Later, if the appropriate agreements and further drilling ensue, the aim is to expand Leviathan's production by 9 BCM a year, to 10.2 BCM. One problem is that if Noor is as big as thought, it could be a more attractive investment than Leviathan – at the very least, it would last longer.