Damietta LNG Back in Action After Nine-Year Break

The Damietta LNG terminal in north Egypt has produced and loaded its first cargo after nine years offline, operator Eni reported on February 22. The project partners clinched a deal in December ending past disputes over its operation. At full capacity, the facility will produce up to 5mn metric tons/year.

Damietta LNG, one of two LNG export facilities in Egypt alongside the Shell-operated Idku plant, closed in 2012 as Egypt had to divert gas away from the export stream to meet domestic demand. But Egypt now has gas to spare, thanks to the start-up of the giant Zohr field in the east Mediterranean in 2015 and the subsequent launch of several other offshore projects.

Damietta LNG's closure led to a legal dispute between its developers over compensation for lost earnings, resulting in a $2bn award to Eni and Spain's Naturgy by the World Bank’s International Centre for Settlement of Investment Dispute (ICSID) in 2018. Under the December agreement, Naturgy exited the project and dissolved the Union Fenosa Gas joint venture with Eni. Its 40% share will be divided between Eni and Egyptian partners Egyptian Natural Gas Holding (Egas) and Egyptian General Petroleum Corp (EGPC). In return, Naturgy will get $600mn in cash.

"The agreement has already received all the authorisations of the competent authorities and its final closing is expected in the first half of March," Eni said. 

The Damietta and Idku facilities will benefit from rising production at Eni's offshore projects over the coming years. The Israeli and Egyptian governments have also agreed to build a pipeline linking Israel's offshore Leviathan gas field to Egypt's LNG terminals.

The Idku plant can export up to 7.2mn mt/yr, but delivered a small fraction of this amount last year, because of the impact of the coronavirus pandemic on the global gas market. It dispatched only three cargoes between late March and late October 2020.