EGAS says ready for new negotiations over Damietta LNG plant

Ahram Online , Saturday 25 Apr 2020

The February agreement would have rendered the plant 50 percent owned by Eni, 40 percent by EGAS, and 10 percent by EGPC

Egyptian Natural Gas Holding Company (EGAS) (Photo: Reuters)

Egypt's Natural Gas Holding Company (EGAS) stated on Friday it is ready to start a new round of negotiations over the idle Damietta gas liquefaction plant in northern Egypt following the termination of the facility's settlement agreements.

In late February, EGAS signed settlement and framework agreements with Italy's ENI, Spain's Naturgy, Union Venusa Gas, the Spanish Egyptian Natural Gas Company (SEGAS), and the Egyptian General Petroleum Corporation (EGPC).

According to the deals, the Damietta plant was planned to restart in June after resolving a handful of disputes between the Italian and Spanish sides on one hand and the Egyptian companies on the other.

EGAS said on Friday it had implemented some of the conditions stated in the agreements and was ready to implement the rest of them.

“Due to the coronavirus pandemic, other parties who had signed the contracts were unable to implement some conditions, which resulted in the termination of the agreements signed on 27 February,” EGAS said.

“The company is up for new negotiations, taking into account some conditions,” the statement stressed.

The Damietta facility, which has a capacity of 7.56 billion cubic metres per year, has been idle since the end of 2012 when a popular uprising hit gas supplies in Egypt and the government was forced to import gas to meet domestic demand, said Reuters.

With the recent petroleum discoveries, Cairo now has a surplus of gas that it can export through liquefied natural gas (LNG) plants.

The Damietta plant was 80 percent owned by Union Fenosa Gas (UFG), the joint venture between Eni and Naturgy, with the rest split evenly between EGAS and EGPC.

The February agreement would have rendered the plant 50 percent owned by Eni, 40 percent by EGAS, and 10 percent by EGPC.

Naturgy said on Thursday the deal struck with Eni and the Egyptian government has fallen through, adding that the agreement was based on a series of conditions which had not been met, but that it was still open to seeking a friendly solution to the dispute.

Eni's spokesman said the company is in touch with the other parties and is willing to set the framework of a possible new agreement. 

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