No agreement reached for LNG arrivals by end of 2014

Mohamed Adel
3 Min Read
The Egyptian government has remained silent on the Israeli minister of energy's statements that Egypt has to import gas from Tel Aviv at approximately $7-$8 per million thermal units. (AFP photo)
There are fears the government will take responsibility importing LNG shipments which would include renting a gas vessel costing over EGP15bn a year, an official at the petroleum ministry said. (AFP photo)
There are fears the government will take responsibility importing LNG shipments which would include renting a gas vessel costing over EGP15bn a year, an official at the petroleum ministry said.
(AFP photo)

The government has not reached a final agreement with any of the foreign companies on the importing of liquefied natural gas (LNG) for power plants over the next year.

The delay will lead to the much needed LNG shipments not arriving in December as originally planned, despite current official claims.

A Ministry of Petroleum official said an agreement previously signed with Russian company, Gazprom, and Algerian company, Sonatrach, supplying 14 gas shipments were non-binding for any of the parties.

The official added there are fears the government will take responsibility importing LNG shipments which would include renting a gas vessel costing over EGP15bn a year, to provide the power plant’s needs for fuel.

The official emphasised there will be no shipments of LNG to Egypt in December, as the government had previously announced.

He said that the delay in finalising shipments or renting a gas vessel harks back to a 2013 incident under the El-Beblawi government, which tampered with the result of a gas import tender awarded to Shell.

The official added Shell will not supply gas to Egypt until 2016, because the government did not recognised the result of the tender, that was conducted under the rule of ousted president Mohamed Morsi, and returned to the negotiating table after five months.

He revealed that the Ministry of Petroleum had negotiated with several foreign companies for the supply of LNG. These included Shell, British Petroleum, Gaz De France, and British Gas – however, none of the companies will have any supply shipments to Egypt.

He pointed out that the ministry was unable to finance LNG shipments for the coming year, in light of the Ministry of Finance’s refusal to finance shipments to provide the necessary financial liquidity, despite the allocation of around EGP5bn to the current fiscal year’s budget for that purpose.

The official said that the ministry is negotiating to import gas shipments to power stations up to about EGP 1bn per month, and it is required to open a letter of credit in the bank to repay the value of shipments directly.

The Ministry of Petroleum officials are discreet on the current status of the gas import tender launched two months ago. They are also refusing to disclose the date of the finalisation of agreement on shipments or the gas vessel.

 

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