Egypt's Gift From God

What the Discovery of Offshore Gas Means for Cairo

A woman carries a gas cylinder distributed by the army in Cairo, December 6, 2011.  Amr Abdallah Dalsh / Reuters

On August 30, the Italian state-controlled energy company Eni announced the discovery of a “supergiant” gas field off the coast of Egypt. According to initial assessments, the Zohr field contains 30 trillion cubic feet (Tcf) of natural gas (equivalent to 5.5 billion barrels of oil), making it the largest ever discovery of gas in the Mediterranean. This is welcome news for Egypt's struggling economy and fragile political situation. It also creates new challenges and opportunities for the country's neighbors and for outside powers such as Vladimir Putin's Russia. Additionally, it provides powerful economic incentives for Cypriot reunification. As the United States takes stock of what Egypt's good fortune means for the region, it should find much cause for celebration.

The Zohr field is the latest in a series of large offshore gas discoveries in the eastern Mediterranean. In 2009 and 2010, Israel celebrated the discovery of the Tamar and Leviathan fields, which together hold up to 26 Tcf of natural gas. Adjacent to Leviathan, in Cyprus' exclusive economic zone, lies the 7 Tcf Aphrodite field, discovered in 2011. Once developed, these deposits could satisfy both countries' domestic electricity needs for decades and open new opportunities for exports.

While its neighbors were experiencing a gas bonanza, Egypt fell on hard times. Historically the second-largest gas producer in Africa, with 77 Tcf of proven reserves, in recent years Egypt has become a net importer. With falling production unable to keep up with rapidly growing domestic demand, and political turmoil slowing exploration and investment, the country experienced regular power outages. Because the Hosni Mubarak and Mohamed Morsi regimes both fell during periods of regular power cuts, the government of President Abdel Fattah el-Sisi views these outages as a national security threat. To keep the lights on and quell potential unrest, Cairo has shifted energy from industry to residential areas, signed deals to import expensive liquefied natural gas (LNG), and accumulated a growing debt to foreign oil and gas companies.

Women carry gas cylinders to fill them at a distribution point in Cairo January, 2015. Mohamed Abd El Ghany / Reuters
Given this bleak backdrop, it is not surprising that one Egyptian politician described the

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