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Egyptian LNG exports remain strong as Damietta LNG prepares to restart


Seven cargoes shipped from Idku so far in January

17 LNG cargoes shipped in Q4 as prices rose

Damietta LNG seen loading first cargo on Feb 14

  • Author
  • Stuart Elliott
  • Editor
  • Alisdair Bowles
  • Commodity
  • Natural Gas

London — Egyptian LNG exports from the Shell-operated Idku plant -- for now the country's only operational LNG facility -- have remained strong so far in 2021 following the winter jump in spot LNG prices.

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The surge in exports comes as Italy's Eni and partners prepare to restart the country's other LNG export plant at Damietta, which has been idled since 2012.

According to S&P Global Platts Analytics and Platts trade flow software cFlow, a total of seven cargoes have been shipped from the 7.2 million mt/year Idku plant since the start of January -- or around two per week.

That follows a total of 17 cargoes shipped in Q4 -- or total exports in volume terms of 1.6 Bcm of gas equivalent -- with China, India and Turkey taking the bulk of the volume.

That compares with just six cargoes exported in the first quarter of 2020, and only one cargo between the end of the first quarter and end-October.

Egyptian LNG exports ground to a near halt in late March as spot LNG prices fell to record lows, with the JKM spot Asian LNG price falling to $1.825/MMBtu towards the end of April.

Egypt is among a small group of spot-exposed LNG exporters that were forced to curtail production because of low prices in mid-2020.

However, the JKM price has risen strongly in recent months -- hitting an all-time high of $32.50/MMBtu in mid-January -- and this has triggered a renewed wave of Egyptian LNG exports.

Damietta LNG

Egypt is also set for a long-awaited boost to its LNG sector after the shareholders in the 5 million mt/year Damietta LNG facility in December reached a new deal to allow for the plant to restart in Q1 2021.

The plant has been idled since 2012 and its restart would provide additional export optionality for Egypt, which has a surplus of gas mainly due to production from the Eni-operated supergiant Zohr field in the East Mediterranean and imports from Israel.

The new agreement reached by Eni, Spain's Naturgy, and the Egyptian government is aligned with a previous agreement reached in February 2020, which fell through in April due in part to the coronavirus pandemic.

According to market sources, the operator of Damietta LNG -- the Union Fenosa Gas joint venture -- plans to load a test cargo from the plant on Feb. 14.

Asked to comment by S&P Global Platts, an Eni spokesman said only that it was hoped operations at Damietta would resume in Q1.

As part of the December agreement, Naturgy will also be released from its 3.5 Bcm annual gas procurement contract to supply its CCGTs in Spain that was due to end in 2029, with Eni taking over the contract for the purchase of gas for Damietta LNG and receiving corresponding liquefaction rights.

After the deal completes, the shareholding of Damietta LNG owner SEGAS will be Eni (50%), and state-owned EGAS (40%) and EGPC (10%).

The restart of operations in Damietta will result in Naturgy's departure from Egypt and the end of its joint venture with Eni.