Understanding the value of an Eastern Mediterranean gas development in a very uncertain environment

Addressing doubts and concerns

A development bank approached us for guidance as to whether it should invest in a key upstream gas development in the Eastern Mediterranean. In addition to having doubts about the role the asset would play in a rapidly developing regional energy market, our client was also facing internal challenge over whether it should be investing in gas projects rather than renewable energy developments.

In order to address those concerns, the bank wanted to improve its understanding of the importance of gas for the energy security and future economic development of the Eastern Mediterranean.

Analysing different scenarios

The planned development has significant implications for gas supply in the Eastern Mediterranean and beyond. We carried out a market assessment to put the project within the context of the broader energy market. We considered potential competition from other gas developments, the speed at which changes in demand for gas might happen, the impact of new infrastructure and regulation, and the potential to export the gas outside the region as LNG.

We also considered the role of gas within the Eastern Mediterranean’s energy mix to understand its potential impact on regional development. We analysed the difference between scenarios in which the region was gas rich and gas poor to assess the effect on the affordability of energy, the emergence of alternative power sources and wider economic development.

The case for gas

Our analysis showed that the value of the asset in question was in different areas than those initially identified by the client.

With our help, the client team was able to make an informed judgement on this particular investment opportunity, recognising the risks and opportunities associated with the Eastern Mediterranean gas market.

Did you know that your Internet Explorer Browser is out of date?

Your MS Internet Explorer browser is out of date, and will not be fully compatible with our website. For best browsing experience we recommend that you upgrade your IE browser to a more recent version or use an alternative, more recent browser.