Egypt's Damietta Restart "Soon" - UFG
Union Fenosa Gas, the 50-50% joint venture of Italy's Eni and Spain's Naturgy, says it hopes to get the Damietta LNG export plant back and running soon.
Damietta has effectively been shut since 2012 and since 2014 UFG has contested the stoppage of feedgas by Egypt to the plant, which had been promised to UFG when it opened the plant in 2005.
"We expect Damietta to resume their operations soon. We are working hard to make it possible. But as you are well aware, we need to end first the dispute with Egypt through a sound and comprehensive agreement. This is our focus now. Our goal has always been to reach a mutual beneficial arrangement based on the payment of compensation for the damages caused, the restoration of a continous supply and the guarantees of compliance in the future," a spokesman for UFG told NGW on September 4.
A day earlier, UFG announced it is due to receive $2.013bn compensation from the Egyptian government after tax, but not including interest due and legal/arbitration costs, in settlement of the 2014 case.
The full amount due from Cairo is expected to be about $2.205bn, according to industry sources, but it is unclear when it will be paid or when booked in Eni and Naturgy's quarterly results. Egypt has yet to comment on the arbitration award to UFG.
Unlike in 2012-17 when Egypt needed to import much more LNG than it exported, the country is now transitioning into a period when all its domestic gas needs will be met by indigenous production – much of it operated by Eni (such as the 30 trillion ft3 Zohr field) – with the possibility that, even with its much increased power generation needs, Egypt may become a net gas exporter again in the 2020s.
(Banner photo shows a detail of the Damietta LNG export plant and is courtesy of Egyptian construction firm Orascom which helped build it over a decade ago)