Spanish petrochemical company Union Fenosa Gas has signed an agreement with the two Egyptian companies, the Egyptian Natural Gas Holding Company (EGAS) and Egyptian General Petroleum Corporation (EGPC), whereby the two state-owned Egyptian gas and oil firms will acquire a share a combined 20 percent stake in SEGAS (Spanish Egyptian Gas Company), the holding company which owns the natural gas liquefaction (LNG) plant in Damietta on Egypt's Mediterranean shore.
Segas was previously owned 100 percent by UNION FENOSA Gas. As a result of the agreement signed in Cairo, UNION FENOSA Gas will own 80 percent of Segas. The plant will produce LNG for export to Spain from October 2004
Additionally, SEGAS and EGAS have signed a tolling agreement under which SEGAS is assured a contract to liquefy 3.2 billion cubic meters (bcm) of gas per year, delivered by EGAS to the Damietta plant. Since SEGAS also has an agreement with UNION FENOSA Gas to liquefy 4.4 bcm, the Damietta plant is assured 100 percent of its liquefaction capacity for the next 25 years.
“Participation by EGAS in the ownership of Segas and the tolling agreement are important factors in Egypt’s gas export strategy,” said Mohamed Tawila, chairman of EGAS. “The plant is at an advanced stage of construction, which enables Egypt’s LNG export plans to be accelerated and enhances our competitive edge,” he added.
“Today’s agreement is the most important milestone in the development of Egypt’s first liquefaction terminal,” stated Elías Velasco, Chairman of UNION FENOSA Gas and of Segas. “I am very proud of this achievement, which contributes to firm, positive progress of our activities in Egypt and strengthens our cooperation with EGAS and EGPC.”
SEGAS began construction of a 7.6 bcm/year liquefaction train in September 2001. Over 5,400 people are employed in the project, 97 percent of them Egyptian and most of them employed by local companies.
Scheduled to come into service in October 2004, it is currently the largest single liquefaction plant in construction in the world. The first shipment of gas to Spain will take place at the end of 2004. The plant will cost approximately $1.3 billion—among the lowest unit costs for an LNG project worldwide.
On 20 June, Spain’s Cabinet authorized Italian company ENI to exercise the voting rights corresponding to its 50 percent stake in the capital of UNION FENOSA Gas. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
