Page 11 - GLNG Week 48 2020

GLNG COMMENTARY GLNG

Egyptian LNG plant set for restart

after eight-year hiatus

Thanks to the 2017 launch of the Zohr field, Egypt now enjoys a gas surplus that it is

eager to export

PERFORMANCE ITALY’S Eni has reached deals with Spain’s Supply surplus
Naturgy and its Egyptian partners that pave the The legal dispute at Damietta was over compen-
WHAT: way for the restart of Egypt’s shuttered Damietta sation due to the operators after the plant was
Eni has reached deals LNG plant. idled in 2012. At the time, Egypt was running
with Naturgy and its Damietta LNG is capable of exporting 5mn short of gas for the domestic market, and there-
Egyptian partners, tonnes per year (tpy) of LNG but has been fore diverted some from its export stream. UFG
under which Naturgy idle since 2012 because of a legal dispute. Its was awarded $2bn by the World Bank’s Inter-
will withdraw from the owner is SEGAS, which is 80%-controlled by national Centre for Settlement of Investment
Damietta LNG plant. Union Fenosa Gas (UFG), a 50:50 joint venture Dispute (ICSID) in compensation for Egypt’s
between Eni and Naturgy. actions.
WHY: Under the agreements, UFG’s interest will be The Egyptian gas market is now very differ-
The plant was shut down divided between Eni and Egyptian Natural Gas ent to what it was back then. The country now
in 2012 because of Holding (EGAS), leaving Eni with a 50% stake enjoys a surplus of supply thanks to the 2017
domestic gas shortages, in Damietta LNG and EGAS with 40%. Egyp- launch of the giant Eni-operated Zohr field in
but is expected to restart tian General Petroleum Corp. (EGPC) controls the Mediterranean. Several more large gas fields
in the first quarter of the remaining 10%. Naturgy will receive a series have been discovered by Eni and others since
2021, now that Egypt has of cash payments worth $600mn in total. Once then, ensuring that a surplus will remain for
surplus supply. these are paid it will leave Egypt and end its joint some time.
venture with Eni. Damietta’s relaunch was anticipated sooner,
WHAT NEXT: Eni will also assume responsibility over the but was held up because of delays in settle-
Egypt is also expanding contract for purchasing gas for Damietta LNG ment proceedings. The project partners
the use of gas at home, and have rights to half of its liquefaction capac- managed to reach a deal in February but it
with a key focus being the ity. Damietta LNG should start back up in the collapsed two months later after certain terms
conversion of vehicles to first quarter of 2021, the Italian major said. Eni were not met. According to reports, coronavi-
run on CNG. will also take over UFG’s marketing of gas in rus (COVID-19) restrictions meant workers
Spain, expanding its position in the European could not go in and inspect the plant. And the
market. slump in global gas prices triggered by the

Week 48 04•December•2020 www. NEWSBASE .com P11