A World Bank arbitration body has ruled that Egypt must pay US$2 billion to a Spanish-Italian joint venture in a dispute over halted natural gas supplies in the early 2010s, the company Union Fenosa Gas (UFG) said in a statement.
Union Fenosa Gas, a joint venture of Spain's Naturgy and Italy's Eni, operates the Damietta liquefied natural gas (LNG) plant in Egypt. The company took the country to court in 2014 to claim compensation and hold Egypt accountable for the interruption of gas supplies to the Damietta facilities, after Egypt suspended supplies to the plant, as it was facing domestic energy shortages in the chaos after the Arab Spring.
Egypt will likely pay that US$2-billion settlement not in cash, but in the form of resumption of gas supplies to the Damietta plant, the Financial Times reported, quoting sources familiar with the issue.
The settlement of the dispute could pave the way to speedier resumption of Egypt's LNG exports, according to FT.
"UFG expresses its great satisfaction with the outcome of the award since it reinforces its confidence in the final resolution of this long dispute and allows the company to reaffirm its commitment to Egypt and its willingness to continue its operations in the country generating wealth, welfare and social development," the JV said in the statement.
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Following the start-up of the giant gas field Zohr, Egypt became an important player in the Mediterranean. Zohr, discovered by Eni in 2015, plays a key role in helping Egypt to avoid the need to import LNG, according to the Italian oil and gas major.
In June, Egypt issued what is likely to be its last LNG import tender, and could begin exports early in 2019, Egypt's Petroleum Minister Tarek El-Molla told Bloomberg at the time. The June tender was for Egypt's third-quarter gas needs, and it might not need to import LNG for the fourth quarter and onwards, the minister said.
Meanwhile, the Zohr operator and largest gas producer in Egypt, Eni, said last week that it had made an onshore gas discovery in Egypt's Western Desert that could raise production in the Western Desert Basin.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More