By Mohammed Jetutu, North Africa Correspondent
Egypt’s state gas company EGAS, needs a billion dollars to execute agreement for 12 shipments of LNG, boat and pier rental in Ain Sokhna, and letters of guarantee.
The gas is required by the country’s power plants throughout the summer months. The Ministry of Finance has yet to provide the funds, according to Khaled Abdel-Badie, Chairman of EGAS.
Abdel-Badie says Liquidity will be provided through signing and determining supply appointments, but EGAS has yet to sign with Russia’s Gazprom to provide seven shipments of LNG, and with France’s EDF for five shipments.
EGAS has inked a Letter of Intent (LOI) with the Norwegian company Höegh LNG, for the charter of one of Höegh’s Floating Storage and Regasification Units (FSRU), which will act as an LNG import terminal in the port of Ain Sokhna, located on the Red Sea’s Gulf of Suez. The designated vessel Höegh Gallant, is one of four of Höegh’s LNG newbuilds currently under construction at Hyundai Heavy Industries (HHI) in South Korea. Abdel-Badie says the boats will start to arrive at Ain Sokhna Port in September 2014.
Egypt held 72 Trillion Cubic Feet of proved reserves of natural gas at the end of 2012, according to the 2013 edition of BP’s Review of Statistics. But the country is witnessing a decline in production rates and a subsequent deficit of approximately 2 billion cubic feet per day. The country produced 4.9 billion cubic feet per day in March 2014, compared with 5.6 billion cubic feet per day in March 2013.
There’s an ongoing conversation in Egypt regarding asking cement plants plants to convert their fuel from gas to coal and other manufacturing plants to import fuel, so the country can utilize as much as possible of its gas resources for electricity plants. Egypt’s electricity capacity is 31,000 MW which its power ministry claims is expected to increase by 3,000 MW during the coming months. 85% of the plants are gas fired generators.
One shipment of liquefied natural gas meets six days needs for power plants, which consume 500 million cubic feet of gas per day, Mr. Abdel-Badie explains. EGAS is also talking with Sonatrach, the Algerian state hydrocarbon company, for the possibility of gas supply in the same summer period.