Union Fenosa denies agreement with Egypt over Damietta LNG plant
DISPUTE WATCH- The Damietta LNG plant may not be reopening in April after all: Damietta LNG plant operator Union Fenosa Gas (UFG) poured cold water on reports this week that the facility will be reopened in April. An Oil Ministry source claimed this week that UFG, 50-50 owned by Union Fenosa and Eni, had agreed to drop its USD 2 bn arbitration claim against the Egyptian government, paving the way for the resumption of LNG exports. UFG has since confirmed talks are ongoing, but denied having reached an agreement with the state: “Progress has been made but the guarantees offered are not sufficient to reach the comprehensive agreement required to bring the dispute to its end,” the company said in a statement (pdf).
Background: UFG has been seeking compensation from the Egyptian government after the latter cut gas supplies to the Damietta plant in 2012. In September, the World Bank’s International Center for Settlement of Investment Disputes ordered the government to pay a USD 2 bn settlement to the European JV. However, a ministry source claimed this week that UFG had agreed to drop the claim in return for a share of EGPC’s profits generated from its ownership in the plant. UFG owns an 80% share of the Damietta facility though subsidiary SEGAS, in which state energy companies EGPC and EGAS hold 10% each.