Italian energy company Eni said Egypt was on track to regain its former full LNG export capacity as the first cargo was shipped from the Damietta plant east of Alexandria, shut down in 2012, firstly because of feed-gas shortages and then from 2017 over a dispute among shareholders.
Eni said the re-start was made possible after an agreement was reached in December 2020 aimed at settling all disputes between the shareholders linked to the long shutdown.
“At this stage the agreement has already received all the authorizations of the competent authorities and its final closing is expected in the first half of March,” explained Eni.
“The agreement comes at an important moment, when also thanks to the fast time to market of Eni's natural gas discoveries, especially the ones in the Zohr and Nooros fields, Egypt has regained its full capacity to meet domestic gas demand and can allocate surplus production for export through its LNG plants,” stated Eni.
With Damietta back on stream, Egypt can add 4.5 million tonnes per annum of output to its export volumes now totalling 12.5 MTPA.
The move forward for Damietta came after the resolution of the long-standing dispute between the shareholders over contracts because of the closure.
Naturgy, the Spain-based European utility, agreed to sell its stake in the Damietta plant and to rescind its Egyptian gas contracts on departing from the Unión Fenosa Gas (UFG) joint venture.
Naturgy’s UFG partners, Eni and the Egyptian Natural Gas Holding Company (Egas), reached the agreement under which Naturgy would receive a series of payments adding up to US$600 million.
The Spanish utility is also receiving most of UFG’s assets outside of Egypt as well as being released from the 3.5 billion cubic metres annual gas procurement contract to supply its gas-fired power stations in Spain, which was due to end 2029.
Under the settlement deal, these Spanish interests are being taken over by Eni.
The Damietta LNG plant had been idle since November 2012 when Egypt suffered natural gas shortages.
In addition to Damietta LNG, Egypt has a second export plant, the Idku facility operated by Royal Dutch Shell, and which has been back in commercial operation since 2017.
As regards Damietta plant shareholdings, the Naturgy 80 percent in Damietta liquefaction was transferred with Eni receiving 50 percent and 30 percent going to EGAS.
The resulting shareholding of the Damietta holding company sees Eni with 50 percent, EGAS holding 40 percent and Egyptian General Petroleum Corp. with 10 percent.
Eni has also taken over the contract for the purchase of natural gas for the plant and receives corresponding liquefaction rights.