SPM Saipem Spa

By Miriam Malek

Italian oil and gas contractor Saipem (SPM.MI) has been awarded an engineering and construction contract to develop the massive offshore Zohr gas field in Egypt.

The work, which includes installing a 16-inch gas export trunkline and deepwater field development, is scheduled to begin in July and should be completed by the end of next year, with the gas field expected to come on-stream by 2018, Saipem said in a statement.

Egypt's natural gas demand is set to continue growing at a strong rate over the next five years, according to the International Energy Agency. Demand will grow at an average annual rate of 5% until 2021 as domestic production likely increases.

The country started to import gas last year, though the development of the Zohr field could alter the gas-supply outlook over the coming years, the IEA added.

The reserves at the Zohr field amount to around 30 trillion cubic feet. Developments in the field are set to boost Egyptian gas output by up to 27 billion cubic meters by 2019, according to the IEA.

Italian oil company Eni SpA (E), which discovered the Zohr field in 2015, earlier this year sanctioned its development, with initial investment estimated to be around $4 billion.

Egypt imports liquefied natural gas through two terminals, with a combined annual capacity of around 12 million metric tons.

Oil major BP PLC (BP) said in June it is fast-tracking a major offshore gas discovery in Egypt.

Write to Miriam Malek miriam.malek@wsj.com

(END) Dow Jones Newswires

July 07, 2016 07:32 ET (11:32 GMT)

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