February 19, 2019 / 9:54 AM / 3 months ago

Union Fenosa says guarantees not sufficient to restart Egypt LNG plant

CAIRO, Feb 19 (Reuters) - Union Fenosa Gas (UFG) said it had not received sufficient guarantees over a $2 billion payment in ongoing talks with Egypt to restart a liquefied natural gas (LNG) plant which has been idle for several years due to a lack of gas supply.

UFG said in September that it was “in conversations with Egypt to restart the plant as soon as possible”, in an emailed response to Reuters over $2 billion a World Bank arbitration body ordered Egypt to pay the company. It did not elaborate.

Egypt had said it was “taking all necessary steps”, without elaborating, over the money it was ordered to pay to UFG because of a lack of gas supply to the Damietta plant, in which the Italian-Spanish company has a majority stake.

“Progress has been made but the guarantees offered are not sufficient to reach the comprehensive agreement required to bring the dispute to its end,” UFG said in a statement on Monday, adding talks were ongoing.

UFG said in 2013 Egypt was restricting supplies to the plant as it diverted export supplies to its domestic market. The plant has been idle since.

The Damietta plant in northern Egypt is 80 percent owned by UFG, a joint venture between Spain’s Gas Natural and Italy’s Eni , with the remaining 20 percent split evenly between the state-owned Egyptian Natural Gas Holding Company and Egyptian General Petroleum Corporation.

Reporting by Ehab Farouk, additional reporting by Ahmad Elhamy; Writing by Yousef Saba; editing by Emelia Sithole-Matarise

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