Egyptian Plan to Supply Europe’s LNG Gets Boost as Plant Reopens

After an eight-year hiatus, Egypt is close to restarting its second liquefied natural gas project, as the North African nation aims to become one of Europe’s primary fuel suppliers.

According to people with direct knowledge of the situation, Vitol Group, the world’s largest independent oil trader, is scheduled to load cargo at the port of Damietta in northern Egypt. It will be the first shipment since 2012 from the factory.

The repeatedly delayed return of the Damietta plant would mark a revival of Egypt’s super-chilled fuel exports, which sputtered in the midst of a dispute over the supply of gas to the terminal. Although the country accounted for just about 1% of worldwide supply in 2019, the reopening of the LNG terminal would support its plan to become an export hub on the doorstep of Europe.

According to the citizens, the Vivit Americas LNG tanker is scheduled to arrive at the plant on Feb. 21, but that destination could change. Vitol has refused to comment.

In November 2012, Damietta, which can process 5 million tons of LNG a year, was idled after Egypt stopped supplying the facility with gas. Following the coronavirus pandemic, Idku is only stepping up exports and lower prices have forced it to suspend shipments around the middle of last year.

Damietta’s return marks another milestone in the LNG push in Egypt. With the aid of major discoveries, including the giant Zohr field, the nation recovered gas self-sufficiency. That followed years of declining domestic production that in 2014 forced it to stop most exports of LNG.

According to Bloomberg, the restart follows the settlement of a long-standing conflict between the government and Union Fenosa Gas, the 50-50 joint venture between Naturgy Energy Group SA of Spain and Eni SpA of Rome, over supplies. The plant is divided equally between Eni and the government under the deal.

Naturgy, which is swerving its priority to renewables, will exit UFG and its Egyptian operations. Eni, like other majors, is looking to decarbonize and sees gas as a crucial part of the evolution. The restart will assist it enhance its LNG portfolio, in particular in Egypt, where the company is the main gas producer.

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