Eni Strikes Deals to Reopen Egypt's Damietta LNG Plant
MILAN (Reuters) - Eni said in a statement that the new agreements would pave the way for the liquefied natural gas (LNG) plant in the port city of Damietta to restart operations by the first quarter of next year.
An earlier deal hammered out between Eni, Naturgy and the Egyptian government over the plant fell through in April when a series of conditions were not met.
The new deal, which still needs the green light from European Union authorities as well as other conditions to be met, will allow Eni to increase its LNG portfolio and strengthen its gas foothold in the Eastern Mediterranean.
Naturgy said in a separate statement that it will receive a series of cash payments totalling around $600 million under the deal, which when completed will result in its departure from Egypt and the end of its joint venture with Eni.
Eni, one of the biggest foreign oil and gas producers in Africa, discovered Egypt’s biggest-ever gas field Zohr in 2015 and has other assets in the Mediterranean.
Like other majors, Eni is looking to decarbonise and sees LNG and gas as important resources in that transition.
The Damietta plant was 80% owned by Union Fenosa Gas (UFG), a joint venture between Eni and Naturgy, with the rest split evenly between the Egyptian Natural Gas Holding Company (EGAS) and Egyptian General Petroleum Corporation (EGPC).
Under the new agreement, the plant will be 50% owned by Eni, 40% by EGAS and 10% by EGPC.
Eni also said it would take over UFG’s marketing of natural gas in Spain, bolstering its presence in the European market.
Naturgy has been renegotiating supply contracts after a gas price slump caused by lower demand and oversupply.
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