The natural gas market is alive today with the news of a new natural gas deposit.
Italian energy company Eni SpA (NYSE:E) just announced its discovery of a natural gas deposit in the deep water area of the Mediterranean along the northern coast of Egypt.
The company claims, with preliminary numbers, that it could be the world’s largest natural gas deposit found to date and could satisfy Egypt’s natural gas demand for decades.
As impressive as this discovery is, it does not bode well for Israel.
You see, a partnership between Noble Energy (NYSE:NBL) and Delek Group (TLV:DLEKG) have discovered two large natural gas deposits of their own in Israeli waters. The two companies have been in negotiations with the Israeli government for long-term contracts to sell the supply to Egypt.
Unfortunately, political regulatory uncertainty has kept these deals from being finalized. And now it’s taking its toll on the country.
“…while Israel has been ‘sleep walking’ and delaying the final approval of the gas outline… the world is changing in front of our eyes,” said Israeli Energy Minister Yuval Steinitz.
Already the glut of natural gas is causing not only economic, but political upheavals all over the world.
On one hand, there is the benefit of LNG exports quickly being developed in the U.S. and Canada, both of which are aimed at supplying Europe.
On the other hand, this and other new suppliers coming into the market hurts status-quo natural gas powers like Russia, which has had a thug-like hold on several European and Middle Eastern countries for decades.
Israeli officials have been dragging their feet on this export deal, and the discovery in Egypt lowers the possibility that the deal will be profitable.
Noble and Delek will need to begin business quickly before Eni can gain a foothold of its own and steal away market share in Egypt and North Africa.
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Until next time,
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