In a parallel agreement, EGAS has signed a 'tolling agreement' with SEGAS under which it has guaranteed to sell the remaining 2.3 million tonnes a year (t/y) of spare capacity not accounted for by the principal offtaker, Union Fenosa Gasof Spain. Union Fenosa, which is the main investor in SEGAS, has already guaranteed the sale of 3.2 million t/y over the 25-year project lifetime. Discussions between EGAS and an unidentified European company over a possible sales agreement are well advanced, say project sources. Until now, the lack of a second sales guarantee is understood to have been one of the chief concerns of international banks following the project, for which Citibankis acting as financial adviser (MEED 18:10:02).

Union Fenosa Gas, a 50:50 joint venture between Union Fenosaof Spain and Eniof Italy, will retain an 80 per cent stake in SEGAS.

The Damietta LNG plant, which has the largest single train under construction in the world, is being built on an engineering, procurement and construction (EPC) basis by US-based MW Kelloggwith Tecnicas Reunidasof Spain. The first train is expected to come on stream in 2004, shortly before first gas exports from the first train of the Egyptian LNGplant at Idku (see below).

Eni acquired its 50 per cent stake in Union Fenosa Gas in December 2002, under the terms of which it agreed to underwrite a $440 million increase in the company's share capital to $930 million. The strategic partnership is intended to support Union Fenosa's heavy investment in the development of upstream assets in the Middle East - the company has also committed to buy 50 per cent of the planned output from the 3.3 million-t/y third train at Sur in Oman (MEED 13:12:02).