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Thursday, 30 January 2020

Damietta LNG plant operator Union Fenosa Gas still wants its USD 2 bn

DISPUTE WATCH- The Damietta plant probably isn’t going to be opening in a few weeks: The dispute between the Egyptian government and Damietta LNG plant operator Union Fenosa Gas (UFG) doesn’t seem close to ending, after the joint venture restated its demands for a USD 2 bn settlement, according to reporting by Law360. UFG reportedly stated during testimony in a Washington DC federal court on Monday that there stands “no conceivable justification for Egypt to continue ignoring” the award.

The development came less than a week after the court re-launched proceedings which had been suspended since January 2019 when Egypt had reportedly attempted to get the multi-bn settlement annulled. UFG is now asking the court to set out a timetable by which Egypt will need to respond to its complaint. All of this is making Oil Minister Tarek El Molla’s claims last week that the plant could open in a few weeks seem a little ambitious.

The Spanish-Italian joint venture has long been in dispute with the Egyptian government over the Damietta LNG award and has been seeking compensation from the government since the latter cut gas supplies to the Damietta plant in 2012. Tensions rose prompting international arbitration that resulted in the World Bank’s International Center for Settlement of Investment Disputes order the government pay a USD 2 bn settlement to UFG. Talk of resuming the venture and out of court settlements in the form of new gas shipments were floated but none have effectively taken place according to UFG’s prior statements and current testimony.

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