Page 14 - DMEA Week 44 2021

DMEA NEWS IN BRIEF DMEA

POLICY source of foreign exchange for the Egyptian COMPANIES
economy.
Egypt reduces rebate NEWSBASE Sound, Afriquia delay

offered for LNG through Egypt considering deadline for LNG agreement
Suez adjustment for gas prices UK-based Sound Energy has reached
agreement with Afriquia Gaz (Morocco) on
Egypt is lowering the rebate offered to LNG Egypt’s Petroleum Ministry is considering pushing back the deadline for meeting the
tankers passing through the Suez Canal to implementing an automatic adjustment preconditions for signing the Phase 1 LNG
15% effective November 1, the Suez Canal mechanism for the prices of natural gas sale and purchase agreement (SPA) covering
Authority (SCA) has said. supplied to factories for industrial use every 3 future supplies from a small-scale natural gas
SCA announced the change in a statement or 4 months as a step towards liberalising the liquefaction plant slated for construction at
published on its website on October 27. The natural gas market, media sources reported the Tendrara licence area in eastern Morocco.
rebate rate had previously been set at 25%. quoting Petroleum Minister Tarek El Molla as In a statement, Sound Energy said the
The organisation appears to be taking this saying. parties had agreed to postpone the end
step in the hope of benefiting from the surge The announcement comes on the heels of date until November 30. According to
in natural gas prices on the European market. a price hike that raised natural gas prices for previous reports, the two companies had
European gas prices have already risen energy-intensive industries by 28% effective said previously that execution of the SPA
five-fold this year, largely owing to supply from November 1. Cement, iron and steel, would depend on their ability to meet certain
pressures. Russia, which is Europe’s largest petrochemical and fertiliser producers are to conditions by October 29.
single supplier of gas, has indicated that it will pay $5.75/mmBtu, up from $4.50/mmBtu, The extension of the deadline will not
not deliver more fuel this winter. while other industries will see a 21% rise to affect the nature of the preconditions for
However, European buyers may be able to $4.75/mmBtu. signing the SPA, Sound Energy noted. The
obtain more from Qatar, the world’s largest Egypt already has a fuel pricing mechanism company had explained in July that these
exporter of LNG. Qatar uses the Suez Canal for gasoline whereby the government reviews preconditions included signing a credit
to deliver gas to Europe, as this route is the local prices of petroleum products every agreement under which Sound Energy
fastest maritime route to that market. quarter and raises or lowers them by up to would take out an $18mn secured loan from
SCA has reported that a total of 750 LNG 10% according to price fluctuations on the Afriquia Gaz with a 12-year repayment term
tankers transited the Suez Canal in 2019, the international market. and a 6% annual interest rate. The partners
last year for which full annual statistics were The Egyptian government’s latest initiative were also supposed to execute a project
available as of press time. In the same year, to extend the gasoline pricing mechanism to contract with Italfluid Geoenergy (Italy) for
LNG tankers accounted for 4% of vessel traffic natural gas comes in light of natural gas prices the construction of a gas-processing and
and 7% of total tonnage sailing through the surging by five fold in Europe and Asia this liquefaction plant for Phase 1 development.
canal. year on a recovery in demand and tight global Additionally, Afriquia Gaz was required to
The Suez Canal is the shortest maritime supplies following the near-suspension of secure agreement in principle for the sale of at
route serving trade between Europe and Asia, exploration and development work in 2020 at least 60% of minimum take-or-pay volumes
and as such it plays a vital role in the maritime the height of the pandemic. to downstream buyers and obtain regulatory
sector and in international trade more NEWSBASE approval for the transport of LNG via tankers
broadly. It is also an important and reliable and the sale of LNG.
Sound Energy did not divulge any details
about the progress of efforts to meet these
preconditions. However, Graham Lyon, the
company’s executive chairman, said he was
optimistic that the parties would be able to
strike a deal soon.
“Much work has been completed in
the last months to conclude all conditions
precedent to the LNG SPA in London, Rabat
and Pescara,” he said. “We are confident that
all conditions precedent to the LNG SPA will
be satisfied and FID and the ‘Notice to
Proceed’ with Phase 1 development can be
announced and all contracts executed.”
Sound Energy obtained a majority stake
in the Tendrara concession earlier this
year, when it acquired a 27.5% interest in
the project from Schlumberger Silk Route
Services (SSRS), an affiliate of Schlumberger,
one of the world’s largest oilfield service
providers (OSPs). The deal pushed the UK-
based company’s holdings up from 47.5% to

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