Petroleum Ministry to rerun ADCO and Damietta liquefaction factories by 2020/2021: minister

Mohamed Adel
4 Min Read

The Ministry of Petroleum and Mineral Resources aims to rerun ADCO and Damietta factories for liquefaction in their full capacity in order to export gas shipments to global markets by 2020/2021.

Petroleum Minister Tarek El-Molla told Daily News Egypt that the ministry is currently looking to speed up the rerunning of the liquefaction factories with foreign partners, including the Spanish company Union Fenosa Gas and the Dutch company Shell, as well as the obtainment of gas from the Cypriot sides of both factories.

He noted that the ministry is having ongoing discussions with partners in the liquefaction factories in order to eliminate the crisis, waive the arbitration case, and rerun factories that will provide the state with US dollar revenues.

Foreign partners in the Damietta gas liquefaction factory, Spanish companies Union Fenosa and CGas, have frozen the international arbitration suit against the Egyptian government. The suit was filed after gas pumping was stopped to the liquefaction factory in July 2012.

Negotiations between the two companies and the Petroleum Ministry took place in order to reach a solution that satisfies both parties without resorting to international arbitration.

The share agreed to be pumped into the liquefaction factory is estimated at 750m cubic feet per day. The project’s ownership is portioned 52% for Union Fenosa and CGas and 48% for the Egyptian government.

The petroleum minister added that it was agreed with Dutch Shell, owner of the ADCO liquefaction factory, to pump 125m cubic feet of gas daily to operate the factory and export gas shipments. Gas prices of phase 9B in Borollos fields were adjusted.

The contractual export amount for ADCO is estimated at 1.13bn cubic feet of gas daily to be exported to global markets.

El-Molla noted that the ministry is currently scheduling the dues the government owes to Shell. They will be formulated legally then added as part of the adjustment of the 9B phase agreement. They will then be passed to the parliament in order to be approved. The aim is to reassure partners of the government’s commitment to the repayment of dues according to scheduling.

He added that gas prices of the 9B phase in the deep waters of the Mediterranean are based on a price equation linked to the prices of Brent Crude, with a maximum of $5.88 and a minimum of $2.5 per million thermal units after the adjustments.

Dutch Shell has postponed the work in phase 9B located in the concession area of the Mediterranean after the completion of the first phase 9A. It was connected to the national gas grid five months ago.

El-Molla expects work in phase 9B in the West of the Delta, which is located in the deep waters of the Mediterranean in Borollos fields affiliated with Shell, to reach a production capacity of 390m cubic feet per day in October 2017.

He pointed out that the project aims to develop reserves estimated at 351bn cubic feet daily, in addition to 3.4m barrel of condensates, with investments worth nearly $1.1bn.


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