Egypt-UFG must resolve legal disputes before Israeli imports approved
The Egyptian Petroleum Ministry will only allow Union Fenosa Gas to
import gas from Israel once the two legal cases it is has launched
against the government are resolved.
UFG, a joint venture between Spain’s Gas Natural and Italy’s Eni, started arbitration proceedings against Egypt in February for the government’s failure to deliver contracted gas supplies to the company’s Damietta LNG plant. UFG has been forced to idle the plant since December 2012 because of the gas shortage.
The lawsuit follows an earlier case launched by SEGAS – an 80/20 JV between UFG and Egypt’s state-owned Egyptian Natural Gas Holding Co. (EGAS) – in April 2013 against EGAS for failing to pay for its 40% of contracted capacity at Damietta.
An official source at the Ministry of Petroleum said in a statement that the Egyptian authorities will not approve imports of Israeli gas into Egypt “without solving all the outstanding issues of commercial arbitration”, and only if the transaction offers “high added value to the Egyptian economy”.
UFG signed the letter of intent with Noble Energy for the supply of 4.5 billion cubic metres per year of gas from the Tamar field to Damietta earlier in May. The letter covers the sale of 70.8 bcm of gas from Tamar to the plant over 15 years.
UFG and Noble aim to sign a final sales and purchase agreement for Tamar gas within six months, pending regulatory approvals in Israel and Egypt. Further clarity on whether the government is likely to approve the deal is expected following the Egyptian presidential elections at the end of May, in which former military chief Field Marshal Abdel Fattah al-Sisi is expected to claim victory.
However, this initial statement from the ministry sounds positive, sources told Interfax.
UFG, a joint venture between Spain’s Gas Natural and Italy’s Eni, started arbitration proceedings against Egypt in February for the government’s failure to deliver contracted gas supplies to the company’s Damietta LNG plant. UFG has been forced to idle the plant since December 2012 because of the gas shortage.
The lawsuit follows an earlier case launched by SEGAS – an 80/20 JV between UFG and Egypt’s state-owned Egyptian Natural Gas Holding Co. (EGAS) – in April 2013 against EGAS for failing to pay for its 40% of contracted capacity at Damietta.
An official source at the Ministry of Petroleum said in a statement that the Egyptian authorities will not approve imports of Israeli gas into Egypt “without solving all the outstanding issues of commercial arbitration”, and only if the transaction offers “high added value to the Egyptian economy”.
UFG signed the letter of intent with Noble Energy for the supply of 4.5 billion cubic metres per year of gas from the Tamar field to Damietta earlier in May. The letter covers the sale of 70.8 bcm of gas from Tamar to the plant over 15 years.
UFG and Noble aim to sign a final sales and purchase agreement for Tamar gas within six months, pending regulatory approvals in Israel and Egypt. Further clarity on whether the government is likely to approve the deal is expected following the Egyptian presidential elections at the end of May, in which former military chief Field Marshal Abdel Fattah al-Sisi is expected to claim victory.
However, this initial statement from the ministry sounds positive, sources told Interfax.
Link to source: http://interfaxenergy.com/gasdaily/article/8208/egyptufg-must-resolve-legal-disputes-before-israeli-imports-approved
