The Diplomat
Naturgy, Eni and the Egyptian government yesterday closed the agreement reached to amicably resolve the disputes affecting Union Fenosa Gas (UFG), the Italian company announced.
Naturgy’s chairman, Francisco Reynés, announced on Tuesday, on the occasion of the group’s General Shareholders’ Meeting, that the agreement would be finalised this week.
With this agreement, the Spanish group receives 600 million dollars (about 500 million euros) in cash and UFG’s assets outside Egypt. In addition, the deal frees Naturgy from its annual gas supply contract of around 3.5 bcm to supply its combined cycles in Spain, which was due to end in 2029, and retains the LNG supply from Oman.
In this way, reports Europa Press, Naturgy puts an end to a conflict that had been dragging on since 2012 due to the complex situation at the Damietta plant and which ended up in the international arbitration courts, with an award in favour of UFG for 2,000 million dollars (about 1,700 million euros) from the ICSID.
The agreement, reached last December, provided for the start-up of the Damietta liquefaction plant in Egypt, the amicable settlement of pending disputes and the corporate restructuring of Unión Fenosa Gas itself, whose assets have been divided between shareholders Eni and Naturgy, as well as the plant, owned by the company Segas – 50% owned by Eni and the Egyptian companies EGA (40%) and EGPC (10%).
Damietta, with a capacity of 7.56 billion cubic metres per year, had been idle since November 2012 and has resumed production.
The first LNG cargo was loaded on 22 February, followed by a second on 4 March, while a third, which is being loaded at the facility, will be sold directly by Eni to its customers in Europe.
Eni stressed that, through this agreement, it is strengthening its presence in the Eastern Mediterranean, a key region for the supply of natural gas, a fundamental resource for the energy transition, of which Egypt is the main producer in the area.
As for Unión Fenosa Gas’ activities outside Egypt, Eni will take over the natural gas marketing activities in Spain, reinforcing its presence in the European gas market.
The agreement comes at an important time when, thanks in part to the rapid entry into production of Eni’s recent natural gas discoveries, especially in the Zohr and Nooros fields, Egypt has regained full capacity to meet domestic gas demand and is able to export excess production through LNG facilities.
