Segas, a joint venture of Egyptian Natural Gas Holding Company (Egas), Spain’s Union Fenosa, Italy’s Eni and the UK’s BP, signed a deal in June 2006 to double existing capacity at the Damietta plant through a 5.1 million tonne-a-year (t/y) expansion.
But one senior executive involved in the joint venture says while talks are continuing with the Egyptian Petroleum Ministry, a final investment decision may be delayed until 2010, rather than the end of 2008 deadline previously promised by the consortium.
“It may not happen until 2010 now and that is hugely disappointing,” says the executive.
“We are speaking with the [oil] minister every few days about this but it is beyond his control as to what happens. We have to sit tight and hope for the best.”
The Egyptian government announced on 8 June that it would sign no new contracts to export natural gas until the end of 2010, or until international prices have stabilised.
Opposition parties in Cairo claim the country is losing money because it is locked into poor export deals as energy prices rise.
Egypt has been selling gas to Union Fenosa from the LNG plant at Damietta at a low price under long-term sale and purchase deals, which has helped it finance its LNG plants (MEED 23:5:08).