Eni, the Italian giant, has come to an agreement with the Egyptian General Petroleum Corporation (EGPC), the Egyptian Natural Gas Holding Company (EGAS), and its Union Fenosa Gas (UFG) partner Naturgy to finally re-open the Damietta liquefaction plant in Q1 2021.
Per the statement, Naturgy will opt-out of the project and redistribute its shares among the remaining shareholders in addition to receiving about $600 million and most of UFG’s assets outside Egypt excluding UFG’s commercial activities in Spain where Eni will take over them. Eni will then own 50% of the plant, EGAS will hold 40%, and EGPC the remaining 10%. Eni will also take over the contract for natural gas’ purchases for the plant and will receive corresponding liquefaction rights. This is to increase its volumes of liquified natural gas (LNG) portfolio by 3.78 billion cubic meters per year (bcm/y), noting that the plant has a capacity of 7.56 bcm/y.
It should be noted that an agreement was previously reached in March, however, a month later, the parties involved declared in April that they failed to settle on an agreement. The plant has been on hiatus for eight years, however, restarting the project aims to reinforce Eni’s strategic objectives to expand its LNG portfolio, especially in Egypt. Not only that, but this step will allow strengthening Eni’s presence in the Eastern Mediterranean, a key region for the supply of natural gas, an important resource for the energy transition.
UFG was represented by Ernst & Young and Matouk Bassiouny & Hennawy, while Riad & Riad and CMS represented Eni, and Zaki Hashem and Shearman & Sterling represented EGAS.