Page 4 - DMEA Week 48 2020

DMEA COMMENTARY DMEA

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

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

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