Egypt's Damietta Liquefaction Plant Agreement enters into force

CAIRO – 10 March 2021: The Egyptian Ministry of Petroleum and Mineral Resources announced the entry into force of the agreement related to the Damietta Liquefaction Plant, and the settlement of all claims between the Egyptian Natural Gas Holding Company (EGAS), Union Fenosa Gas Company, and the Spanish-Egyptian Gas Company.

The ministry clarified in a statement, Wednesday, that the agreement signed in December 2020 includes resuming production at Damietta's natural gas liquefaction plant, and increasing EGAS' capacity to liquefy the plant.

It added that it also includes the acquisition by EGAS and the Egyptian General Petroleum Corporation of 50 percent of the Spanish-Egyptian Gas Company, while Eni owns the remaining 50 percent.

“The agreement strengthens Egypt's position as a regional center for gas circulation by increasing the capabilities of liquefying Egyptian natural gas, which exceeds domestic demand or liquefaction of gas produced by other countries, and they wish to benefit from the distinguished infrastructure in Egypt,” it pointed.

The Damietta Liquefaction Plant produces 7.56 billion cubic meters of gas annually, and in late February the Italian company (Eni) announced the export of the first shipment of liquefied natural gas (LNF) from the Damietta plant, which is the first shipment produced by the plant since it stopped in 2012.

“This is the first LNG cargo produced by the terminal after it was shut down in 2012.” Eni clarified in a statement.

The company commented that such event represents an important milestone in the process to complete the agreement reached on December 1st 2020 aimed at settling all pending disputes between the parties and at restarting the operations at the plant.

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.

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.

Earlier, the Egyptian government signed an agreement with the foreign partners of the project, as the plant is a joint venture between Union Fenosa Gas and the Italian Company Eni. 

In January 2019, it was reported that the government was about to sign an agreement with the main partner of the plant, the Spanish Union Fenosa, to drop a $2 billion arbitration claim lodged after gas to the facility was cut off in 2012.