Egypt’s Damietta Restart Deal Falls Through

A deal put together between Naturgy and Egyptian authorities in February that would have allowed the restart of Egypt’s 5 M/T Damietta LNG export facility has fallen through. The deal would have seen Damietta, dormant since 2012 restart. The facility is operated and 80% owned by Union Fenosa Gas (UFG), a 50:50 joint venture between Italy’s Eni and Spain’s Naturgy.

Eni and Naturgy had reached an agreement in February with the Egyptian government that would have seen Naturgy exit the UFG joint venture. Naturgy would have taken US$600 mn for most of UFG’s assets outside Egypt and its equity in the Damietta LNG, with the equity passing to the remaining stakeholders in the plant. Following Naturgy’s exit, the plant would have been 50% owned by Eni, 40% by Egyptian Natural Gas Holding Co. (EGAS) and 10% by the Egyptian General Petroleum Company (EGPC).

However, the global Corona Virus pandemic combined with a significant drop in oil and gas prices and market uncertainty, have resulted in the plug being pulled on the deal with the asset now losing significant value in the face of these developments.

Naturgy says it will resume its claim in a US$2 billion arbitration case against the Egyptian government but has said it is still open to an “amicable” settlement. The World Bank’s International Center for Settlement of Investment Disputes had already ruled in Naturgy’s favor in the case in 2018.