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Egypt: Plans to expand first LNG facility

Pland have emerged to double the capacity of the country's first liquefied natural gas (LNG) facility, at Damietta, which started exporting in February. Eni, a participant in the venture owning the facility, says a memorandum of understanding was signed in March by itself, BP and state-owned Egyptian Natural Gas Holding Company (Egas), covering gas supplies for the construction of a second train, of 5.0m tonnes a year (t/y) capacity.

Discoveries already made in the Nile delta and exploration on existing and new licences will provide enough gas to cover the 150bn cubic metres needed for the second train over 20 years, Eni says. A third of the volume will be Eni equity gas. The second train "will allow access to the market with higher quantities of LNG at production costs even lower than the first train" – which is the world's largest single-train facility.

The Damietta facility – owned by the Spanish-Egyptian Gas (Segas) venture – was initiated by Spain's Unión Fenosa, which was later joined by Eni as a 50% partner in Unión Fenosa Gas, the holder of 80% of Segas. Egyptian General Petroleum Corporation and Egas each hold 10%.

It was not clear last month whether ownership of the planned second train would be the same as Segas. Eni and BP have had a long-standing plan for the construction of their own LNG facility at Damietta – as had Shell – but prospects for these ventures declined when construction started on Segas and on the BG-led Egyptian LNG facility at Idku. The first train at Idku, of 3.6m t/y capacity, is due to start up in the second quarter and a second train of the same capacity should follow by end-year. BG says a third train is under consideration, but the firm now faces competition from the Damietta expansion.

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