The Egyptian government is continuing its efforts to lock in foreign LNG volumes, and has signed a deal with trading house Trafigura for 33 cargoes.
The agreement, unveiled in a government statement on Thursday, forms part of a $2.2 billion tender launched by state-owned Egypt Natural Gas Holding Co. (EGAS) to secure 75 LNG cargoes from four international companies to help meet the country’s power demand in 2015 and 2016.
According to Abhishek Kumar, energy and modelling analyst at Interfax’s Global Gas Analytics, the Trafigura deal shows the portfolio flexibility suppliers have in terms of sourcing the fuel.
“Moderate LNG demand in Northeast Asia and some countries in Latin America is more favourable to trading companies than NOCs such as Sonatrach and Gazprom,” said Kumar.
“On the other hand, Egypt is making full use of oil-indexed LNG contracts in the low oil-price environment. The country is also making sure supplies are secured to make use of the full capacity of the FSRU – which is expected to be installed by the end of Q1 2015 – this year and next. However, EGAS will be careful of signing long-term supply contracts as that will make it vulnerable to oil price volatility,” added the analyst.
EGAS is expected to finalise the terms of another LNG deal with Russia’s Gazprom in the next few days. Negotiation of the five-year, 35-cargo agreement is said to have been slowed by the recent slump in oil prices.
Cairo has agreed in principle with Gazprom to import 35 LNG shipments between 2015 and 2020, Egypt’s Oil Minister Sharif Ismail said in January.
Egypt concluded a deal at the end of December with Sonatrach to import six cargoes from Algeria between April and September 2015. Cairo is reportedly looking to extend the agreement along the lines of its agreement with Gazprom.
Seven companies, including BP, submitted bids for the tender in October 2014.
Source: Interfax Global Energy