LNG

QatarEnergy, the leading global LNG produce, has signed a farm-in agreement with ExxonMobil Corp. to acquire a 40 percent participating interest in two exploration blocks offshore Egypt.

Under the terms of the agreement, which is subject to customary approvals by the government of Egypt, QatarEnergy will acquire a 40 percent working interest in each of the “Cairo” and “Masry” Offshore Concession Agreements, while operator ExxonMobil will retain the remaining 60 percent working interest.

“I am pleased with our entry into the Cairo and Masry offshore exploration blocks as they expand QatarEnergy’s presence in the Arab Republic of Egypt and extend our ambitious exploration program in-country,” said Saad Sherida Al-Kaabi, the President and Chief Executive QatarEnergy.

Partners

“We look forward to working with our valued long-term strategic partner ExxonMobil, as well as with the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian Ministry of Petroleum and Mineral Resources, in this promising and prospective region,” explained Al-Kaabi.

“I would like to take this opportunity to thank the Egyptian authorities and our partners for their valuable support and cooperation,” he added.

Financial details of the latest QatarEnergy-ExxonMobil transaction were not disclosed.

The Cairo and Masry offshore exploration blocks were awarded to ExxonMobil in January 2023 and cover an area of around 11,400 square kilometres in water depths of 2,000 to 3,000 metres.

The QatarEnergy deal in Egypt was signed amid some concern about one of the main overseas LNG ventures involving QatarEnergy, the US Golden Pass export project and also involving ExxonMobil.

The Golden Pass LNG project has acknowledged ongoing discussions regarding the future role of the US Zachry group in the engineering, procurement and construction joint venture also including McDermott of the US and Chiyoda Corp, of Japan.

Golden Pass talks

“Golden Pass LNG acknowledges ongoing discussions regarding the role of Zachry within the venture,” said a statement.

“Work continues to diligently complete the project, but these discussions may impact site activity in the near term,” the statement added.

The Golden Pass liquefaction facilities are being constructed at the existing import terminal located on the Sabine-Neches Waterway in Texas.

The three liquefaction Trains will have a nameplate capacity of around 16 million tonnes per annum of LNG and ExxonMobil and QatarEnergy are marketing their own volumes.

The Train 1 mechanical completion is still on track for completion at the end of 2024 with first LNG in the first half of 2025.

Höegh LNG Holdings, the owner and operator of 13 LNG vessels including floating storage and regasification (FSRU) units, said an FSRU chartered to Australia will be deployed beforehand to Egypt to improve the Arab nation’s energy security.

Egypt said it was planning to drill around 35 new exploratory natural gas wells in the Eastern Mediterranean and the Nile Delta by 2025 with $1.8 billion in investments in joint ventures with oil and gas majors and with a view to increasing liquefied natural gas production.

The Kingdom of Jordan and Egypt have signed a wide-ranging energy cooperation agreement under which the Egyptians would be able to use the LNG floating storage and regasification unit (FSRU) berthed at the port of Aqaba.

A statement said that the FSRU would be at the disposal of Egypt during the remaining period of the vessel’s charter contract.

Jordan would still have flexibility to import occasional LNG cargoes while the FSRU is under contract to Jordan National Electric Power Corp. (NEPCO) until 2025.

the Jordanians started importing LNG in May 2015 when the 160,000 cubic metres capacity “Golar Eskimo” FSRU arrived at Aqaba.

The FSRU, now known as the “Energos Eskimo”, is currently operated by Energos, a joint venture owner of a small fleet of vessels and held be New York-based LNG player New Fortress Energy Inc. and the US Apollo infrastructure fund.

Proposals

The vessel at Sheikh Sabah Al-Ahmad Port in Aqaba can receive 500 million standard cubic feet per day with a peaking capacity of 750 million per day.

The Jordan-Egypt agreement followed a meeting in Amman between energy executives and ministers from both countries and analysts said that it signals the start of more regional Arab cooperation in natural gas infrastructure for economic development.

A Jordanian statement said that those in attendance included Amjad Rawashdeh, the Director General of Jordan’s NEPCO and Magdy Galal, the Chairman of the Egyptian Natural Gas Holding Company (EGAS).

Others present included Jordan’s Minister of Energy and Mineral Resources Saleh Kharabsheh and the Egyptian Minister of Petroleum and Mineral Resources Tarek El-Mulla.

“The main objective of the agreement is to benefit from the resources of the two countries with higher efficiency at a lower cost, stressing that the use of the floating vessel in Aqaba will run until the end of its charter contract in late 2025, after which a coastal regasification facility would be completed,” said the statement.

Kharabsheh said that his Ministry was now in the process of issuing tenders for the new import terminal hub and that a perspective on how far the designs meet the needs of the two countries will be in place in the next two months.

Regional pipelines

The bilateral agreement is also part of a plan for Jordan to launch a national natural gas programme to supply industry and homes in Amman and the city of Zarqa backed by Egyptian investments

“Egypt has the expertise in domestic gas applications and will help to maximize Jordan's benefit in this field, and the Jordanian-Egyptian cooperation would be extended to implementing a number of other energy projects,” added the statement.

The agreement comes amid huge development plans for the East Mediterranean, including LNG exports by Israel and Cyprus’s Aphrodite field supplying feed gas to Egypt for liquefaction at an Egyptian plant.

Jordan is also an important market for Israel’s surplus gas and was the anchor for development of the first phase of the Leviathan gas project offshore Israel.

Gas connections

More use is expected to be made in the future of the Arab Gas Pipeline (AGP), a 1,200-kilometre trans-regional gas pipeline originally built to carry natural gas from Egypt to Jordan, Syria and Lebanon.

Another regional natural gas pipeline, the East Mediterranean Gas (EMG) pipeline, supplies Egypt with Israeli gas from its East Med fields, Leviathan and Tamar.

The EMG pipeline runs from Ashkelon in Israel to El Arish in Egypt.

The AGP has four sections and the first section extends from El Arish to Aqaba. Its total length is 265 kilometres (164 miles), including a 15km offshore segment running under the Gulf of Aqaba.

The second section runs 390km from Aqaba to El Rehab, which is situated 30km from the Jordanian-Syrian borders.

The third section is 30km in length extending from Jordan (El Rehab) to Syria (Jabber).

The fourth section constitutes part of the gas network in Syria. It runs from Jabber (Syrian side of Jordanian-Syrian borders) to the Syrian-Turkish borders, ending in Lebanon. 

US LNG engineering company Bechtel was awarded a front-end engineering and design contract to study a proposed unified system between the onshore gas processing plant of the West Delta Deep Marine gas fields in the Mediterranean offshore Egypt and the LNG export plant located at Idku east of the Egyptian port of Alexandria.

Egyptian Natural Gas Holding Company (EGAS), the state owner of the Arab nation’s natural gas assets, and Kanfer Shipping, the Norway-based company focusing on small-scale LNG sea transportation and LNG bunkering, said they had formed a joint venture to re-fuel ships transiting the Suez Canal.

Egypt has signed an agreement to increase natural gas production and LNG exports from its two liquefaction plants east of Alexandria to European customers and specifically Italy.

Egyptian commitment to exporting surplus natural gas from the domestic market as LNG from the plants at Damietta and Idku, east of Alexandria, may be affected in the future by deliveries to former gas markets in Lebanon and Syria via Jordan.

TechnipFMC reported an improving market in offshore oil and gas in its first full earnings statement since spinning off the LNG and project engineering unit Technic Energies to become a separate company.

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.