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Egypt advances fast-track LNG import plans

09 Nov 2012 16:21:56 | glm

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The state-owned Egyptian Natural Gas Holding Company (EGAS) has issued a tender to import LNG and establish a floating storage regasification unit (FSRU) along either its Mediterranean or Red Sea coast.

"Interested companies are required to contact EGAS with a formal request including expected first delivery date and previous experience before 22 November," the official document states. Preference will be given to parties that provide the earliest delivery date from May 2013, it adds.

While the prompt timeline appears challenging, US-based FSRU provider Excelerate Energy is said to have achieved similar turnarounds with two previous projects.

Given the infrastructure already available at several Egyptian ports, a source close to the tender has said the tie-back of an existing FSRU at an existing jetty to the nearby onshore gas grid by May 2013 would be achievable.

"Technically, it is not a problem," the source said. "But the project would need to be awarded soon."

For a country that exports LNG through three liquefaction trains at Idku and Damietta, the move to import the product highlights the difficulties the resource-rich nation faces in simultaneously meeting its rapidly growing domestic gas demand requirements while trying to meet its export commitments.

Until more domestically produced gas can be brought to market - from about 2016 - according to regional expert, Hakim Darbouche at the Oxford Institute of Energy Studies, the country will need to import LNG supplies as a stopgap measure. "Egypt [otherwise] is facing a gas deficit and the risk of blackouts on a massive scale," Darbouche said.

Last week's announcement by gas producer and LNG offtaker BG Group that it has failed to arrest declines in gas production this year has added to concern that Egypt's 2013 LNG export volumes will drop and does not sit well either with government plans to expand the use of gas in the power sector.

Egypt's gas-to-power demand is set to grow at 8-10%/year as it brings more gas-fired power plants on line. The alternatives to gas-fired generation are either more expensive or take more time to develop, according to Darbouche.

To meet the rising demand of a growing populace of 82.6m, the Egyptian petroleum ministry is said to be planning LNG imports of 500m cubic feet/day - up to 3.7m tonnes per annum - and has been in discussions at a state level with Algeria and Qatar.

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