Egypt: Joining the LNG exporters
A fourth African country was due to become a liquefied natural gas (LNG) exporter last month. The first cargo from Egypt's new complex at Damietta was expected to sail for Spain at around press-time, marking the country's emergence as a large-scale gas exporter and a competitor for Algeria, Nigeria and, although with very minor production, Libya.
The Damietta project, initiated by Spain's Unión Fenosa, is a single-train facility with a capacity of 5m tonnes/year (t/y) ? giving a marketable gas production of 6.8bn cubic metres a year (cm/y), the firm says. The facility is owned by Spanish Egyptian Gas (Segas), made up of Unión Fenosa Gas ? a 50:50 venture between Unión Fenosa and Eni ? with 80%, and two Egyptian state-owned firms, Egyptian General Petroleum Corporation and Egyptian Natural Gas Holding (Egas), each with 10%.
The LNG will go to Unión Fenosa Gas, taking 2.5m t/y, and three firms with tolling agreements ? BP, taking 1.1m t/y, and BG and Petronas, each taking 0.7m t/y. The feed gas will be supplied initially by Egas from unspecified fields, with BP and Eni contributing from 2008. The facility was constructed by a venture formed by Halliburton KBR, JGC and Tecnicas Reunidas.
Start-up of the facility, only slightly behind the original schedule, is a considerable success for Unión Fenosa which, as an electricity company, had no LNG experience and only limited gas experience when it launched the project. The venture is also structured unusually: because Unión Fenosa has no gas production in Egypt, it based the project on gas contracted from the state-owned companies and others.
Unión Fenosa has emerged as the unlikely winner of a four-party race to take Egypt into the LNG business. Next past the post will be BG, whose 3.6m t/y facility at Idku is due to start-up towards the end of the year ? followed by a second train of the same capacity in 2006. The other planned ventures, led by BP and Shell, now seem to have lost impetus. Indeed, BP sources say that with tolling agreements in place, the company is likely to drop plans for its own plant.
Unión Fenosa launched its plan to seek out competitive gas for its combined-cycle gas-turbine facilities in Spain in 1997. Until now its main source has been Algeria. Besides the Egyptian venture, the firm has an 8% interest in Oman's third LNG train, due to start producing next year; it took delivery of two new, leased, LNG carriers of 140,000 cm capacity last year; and it has interests in two LNG receiving terminals being built in Spain ? the Sagunto facility on the Mediterranean coast (due on stream early this year) and Reganosa on the northeast coast (due for start-up next year). The firm's initial cargo from Egypt is to be delivered to Enagás' Huelva terminal.