The Egyptian Natural Gas Holding company (EGAS) has stopped pumping gas to the Idku liquefaction plant operated by British Gas and GDF Suez, as a result of the increased use of gas by power stations, according to a senior official at EGAS.
He added that since last year, the quantity of gas pumped from EGAS to the Ikdu liquefaction plant did not exceed 100m cubic feet per day, as a result of the ongoing decrease in natural gas production in Egypt.
By contract, the Idku liquefaction plant should be pumped 1.13bn cubic feet of gas per day, but the rates have been decreasing gradually in the past month, reaching only 4m cubic feet on 20 Augustwhich led to a halt in the factory’s work, according to the official.
He added that he is afraid that the Idku liquefaction plant will be subject to international lawsuits and arbitration like its counterpart, Damietta LNG, particularly in light of the government’s refusal to allow companies to import gas from Israel to re-initiate work at factories.
The Egyptian government has failed to negotiate with SEGAS and Union Fenosa on the Damietta LNG plant and was unable to persuade them to waive arbitration, which would require $6bn in compensation. As a result, these partners will not provide gas to Egypt until 2018. The contracted quantities in question stand at about 750m cubic feet of gas per day, according to the EGAS official.
EGAS expects production rates of about 4.85bn cubic feet of gas per day by the 2017/2018 fiscal year, after the North Alexandria gas project is completed, compared to 4.75bn cubic feet produced daily today.
In terms of importing liquefied natural gas from the beginning of the next year, the government will not be able to meet the contractual quantities for the manufacturers at the Damietta and Idku liquefaction plants, because while only 500m cubic feet per day will be imported for power plants, the needs of manufacturers reach up to 1.88bn cubic feet per day.
It is up to the government to conclude negotiations with the manufacturers at Damietta and Idku to start importing gas, and it is their responsibility to help companies avoid international arbitration and re-start work, according to the official.
