Spain's UFG Wins Four-Year Egyptian Battle
Union Fenosa Gas (UFG) – owned 50-50 by Eni and Spain’s Naturgy – said September 3 that an arbitration tribunal has ruled that Egypt must pay it over $2bn compensation.
It lodged the claim in 2014 at the International Center for Settlement of International Disputes (Icsid), the Washington DC-based arbitration tribunal that forms part of the World Bank, in a case against the Arab Republic of Egypt over "the unilateral interruption of gas supply to UFG’s liquefaction facilities in Damietta," according to UFG.
The Damietta plant is owned by Segas, itself 80%-owned by UFG with 20% held by Egypt’s state-owned Egas and EGPC. It was built on the basis that Cairo would always provide sufficient feed gas and opened up in 2005. But as Egypt's indigenous demand subsequently grew, the supply of feed gas to both Egypt's LNG export plants dried up in 2012 - with a non-UFG plant at Idku only recently restarting.
“Icsid has upheld the arguments of the claim filed by UFG in the case ARB/14/4 and has considered Egypt responsible for the breach of the bilateral investment protection treaty between Spain and Egypt since the company was not granted the fair and equitable treatment required,” said UFG on September 3.
“The arbitral tribunal has stated that Egypt must compensate UFG for the damages caused with $2,013mn plus the interest and the associated arbitration and legal costs,” added UFG. It noted this was its second victory over claims, following one issued by the Cairo Regional Centre for Commercial Arbitration (CRCICA) in case 896/2013 in December 2017.
In 2016, UFG strongly disputed reports emanating from Egypt that it had lost a Damietta-related arbitration case in Paris, providing NGW with a statement to the contrary.
On this occasion, UFG expressed its “great satisfaction with the outcome of the award since it reinforces its confidence in the final resolution of this long dispute and allows the company to reaffirm its commitment to Egypt and its willingness to continue its operations in the country generating wealth, welfare and social development.”
UFG has been headed since January 2017 by Daniele De Giovanni, who was previously managing director of Eni's power generation subsidiary Enipower