Egypt will use port location of two former LNG facilities to build petrochemicals plant and energy hub

Thursday, 29 April 2021
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Egypt plans to construct a $7.5-billion petrochemicals, energy and bunkering complex at Ain Sokhna in the Gulf of Suex where it previously imported LNG during the era of natural gas shortages before the Zohr gas field and other discoveries were made in the Eastern Mediterranean and the Nile Basin.

The Egyptian government said the facility would be constructed on a 3.65 million square metres site and is the latest instalment in the country’s comeback story as an LNG exporter and now with plans to build its East Med energy hub.

The deal to develop the complex is between the Red Sea National Refining and Petrochemicals Company and the Suez Canal Economic Zone's development company. They aim to produce value-added petroleum products to fill Egypt's domestic needs and enable exports.

“The products include polyethylene, polypropylene, polyester, bunkering fuel and other petroleum and chemical products,” said a statement.

Egypt’s gas crisis during the “Arab Spring” social upheavals in North Africa and the Middle East in 2014 led to the diversion of natural gas supplies away from LNG production to meet growing domestic demand and to avoid power cuts.

The Gulf of Suez is a main transit point for global shipping and the development of bunkering will be part of the business.

Before the bringing on stream of the Zohr field in the East Med in 2017, Egypt had been forced to import LNG from 2015 in two floating storage and regasification units deployed at Ain Sokhna.

The Egyptians halted LNG imports two years ago and have now started regular exports of LNG from their two liquefaction facilities at Idku and Damietta, east of the port of Alexandria.

The Idku LNG export plant has been on stream again since 2017 under the operatorship of Royal Dutch Shell, which acquired original operator BG Group.

The Damietta facility only re-started operations and exports in February 2021.

With Damietta back on stream, Egypt added 4.5 million tonnes per annum of LNG output to its export volumes now totalling 12.5 MTPA.

The move forward for Damietta came after the resolution of  a long-standing dispute between the shareholders over contracts because of the closure.

Naturgy Energy, 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, Italian Eni company and the Egyptian Natural Gas Holding Company (Egas), reached the agreement under which Naturgy received a series of payments adding up to US$600 million.

Eni has taken over the contract for the purchase of natural gas for the LNG plant and receives corresponding liquefaction rights.

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