Egypt can create energy hub with Cyprus and Israel: Eni CEO

Egypt will be able to create a hub of energy with Israel and Cyprus, and even Libya in the future, Eni’s CEO Claudio Descalzi told Bloomberg in an interview on Friday, regarding the recent Zohr field discovery in its exclusive economic zone (EEZ).

Regarding how the matter affects the politics in the Middle East, Descalzi specifically told Bloomberg: “Egypt will be completely self-sufficient. At the end, they’ll also export energy. It will create stability in Egypt. They can create cash flow selling gas and promote their own development. Then they can aggregate. They can create a hub with Israel, with Cyprus, in the future with Libya. They can be one of the solutions for European energy security.”

As per the cooperation between Israel and Egypt, Descalzi said that the two countries need each other, and that they can share their facilities and work together.

“When energy puts people together, it’s very positive. That could be a very positive case for friendship,” he said.

Oil’s decline: “We don’t control the price”

On the decline in oil prices, Descalzi mentioned that his company had a strategy of owning conventional assets, meaning that they had a very low cost and a very low break-even rate.

“At the moment we have one of the lowest in the industry, because our technical cost is lower than $20 per barrel. And the break-even is now at $27 per barrel. Last year it was $45. We don’t control the price, so we have to work on what we can control. The price of oil dropped about 60 perc ent to 70 per cent, and costs dropped only by between 25 per cent and 30 per cent. So we have to work on that,” he said.

Descalzi mentioned that if they had chosen to go a different route, by investing in complicated projects, tar sands, or Arctic projects, it would have made things difficult for the company.

“I believe in the need to face climate change”

As per the Paris 2015 Climate Change talks and the goals highlighted on reducing emissions, Descalzi said that there is a need to reduce a dependence on fossil fuels.

“I believe in the need to face climate change, reduce fossil fuel – and I put coal and oil and gas all together.  We need to find the right balance,” he said.

He mentioned that Europe was the only one in 2008 to make a strong commitment to cutbacks in fossil fuel use.

However, he added, Europe only represents 10 per cent of worldwide emissions.

“If you put together the US and India and China, they represent the big bulk of the emissions, and there is not a clear commitment to reductions,” Descalzi said.

On the conference, Descalzi said: “If you look at the COP21 [the United Nations Climate Change Conference] report, nobody wants to talk about coal. Nobody wants to because India, China, the US, and Europe, they’re using coal. If you want to reach the 2-degree target, you have to remove coal, and you have to put together renewables and gas.”

On Eni’s efforts to reduce the carbon footprint, he said that in their facilities in Africa, they have replaced the internal consumption of gas with solar power, freeing up gas for the host country.

“Why? Because it’s very easy. We are close to the grid when the grid exists. We can produce hundreds of megawatts, and the remaining electricity that we are not using for our facility we sell to the market at a reasonable price,” he said.

ENI in Cyprus

As Descalzi commented on the partnerships in energy, Cyprus’ Transport Minister Marios Demetriades visited Saipem’s Castoro Sei pipe-layer platform, which is associated with Eni, at the port of Limassol on Thursday.

The Minister noted that the platform’s six-month stay at the port of Limassol – to be used on the Zohr hydrocarbon reserve project in Egypt – proves once again the importance of the Cypriot ports for the economy and the high quality of services they offer.