The EPEG Consortium, which comprises Egypt Holding Gas Company, Cairo-based pipeline contractor Petrojet, engineering, procurement and construction (EPC) contractor Engineering for the Petroleum & Process Industries (Enppi) and Egyptian Natural Gas Company (Gasco), on 18 September registered the Al-Fajr project company with the Ministry of Industry & Trade.

Al-Fajr will be responsible for designing, building, financing and operating the $250 million pipeline from Aqaba to the north of the country. It will also have the 30-year licence to buy gas from Egypt's Al-Sharq Gas Company and to resell it to the National Electricity Power Company (Nepco) for use at power stations in the north.

Construction of the pipeline, which is expected to take about 30 months, will begin once financial close has been reached on the contract.

A senior project source said negotiations between the EPEG Consortium and the Jordanian Energy & Mineral Resources Ministry were likely to be concluded by late October with financial close by the end of the year. MEED understands that Al-Fajr is likely to issue a tender for an EPC contractor to manage the project although it is expected to subcontract the construction work to the consortium members.

The project will be 35 per cent equity financed by Al-Fajr. The remaining 65 per cent will come from loans. The consortium will hold a minimum 40 per cent stake in Al-Fajr with other Arab investors expected to take the remaining shares. If other investors cannot be found the consortium is committed to 100 per cent ownership.

The project is the second phase of an inter-regional project to export Egyptian gas to Jordan and then to Syria and Lebanon by 2006 before going to Europe. Under an agreement signed in June 2001, Al-Sharq will provide Jordan with some 1,100 million cubic metres a year (cm/y) of gas for 15 years from 2003. However, the pipeline will have total capacity of 10,000 million cm/y to allow for future sales of gas to Syria, Lebanon and Cyprus.

The first phase of the pipeline - bringing gas from fields in the Mediterranean via Al-Arish and Taba to Aqaba - opened on 27 July when gas reached the Aqaba power station (MEED 1:8:03; 14:2:03).