The Ministry of Petroleum recently agreed with the foreign partners in the Damietta liquefied natural gas (LNG) plant to gradually restart the plant and export quantities of natural gas produced from the Zohr field in the coming year, after a six year suspension since July 2012.
A source in the oil sector told Daily News Egypt that Eni is currently preparing to build a pipeline from the gas processing plant in Zohr to Damietta LNG plant to be re-exported to European markets.
He explained that the agreement to develop the Zohr field in the Shorouk concession area in the Mediterranean deep water, allows the Italian company Eni to export part of its share in production in the absence of the local market need, after obtaining the approval of the Ministry of Petroleum.
Italian company Eni owns about 25% of the Damietta LNG plant, after buying 50% of the Spanish company Unión Fenosa’s share, making it a shareholder in half of the Spanish company’s stake in the LNG plant.
The share contracted to be supplied to Damietta LNG plant amounts to 750m cubic feet of gas daily. The ownership of the project is 26% to Eni, 26% to Unión Fenosa and CGAS, and 48% to the Egyptian Government.
The source added that the ministry is currently negotiating with the foreign partners in Damietta plant to compensate them for part of the losses caused by stopping the export of gas for about six years, in the form of waiving part of Egypt’s export quota in the factory for a specified period, or allowing it to contract on exporting gas produced from Israeli gas fields, in order to achieve economic benefit for the country.
He pointed out that the decision of the World Bank (WB) arbitration committee does not have any status and will not affect Egypt. He continued that the actual lawsuit filed by the Spanish companies Unión Fenosa and CGAS is still frozen by the foreign partner.
A WB arbitration panel recently decided to charge Egypt $2bn in LNG supply for a Spanish-Italian consortium.
Unión Fenosa filed a lawsuit against Egypt in 2014, asking for $8bn in compensation after the Ministry of Petroleum stopped supplying LNG to Damietta’s plant, due to lack of energy resources inside the country following the January revolution in 2011 and its impact on natural gas production.