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Egypt takes firm fast-track step to import LNG from Q3

12 May 2014 12:28:57 | glm lmd


State-owned Egyptian Natural Gas Holding Company (EGAS) has signed a term sheet and letter of intent (LoI) to take a newbuild floating storage regasification unit (FSRU) from Oslo-based provider Hoegh LNG at the port of Ain Sokhna on Egypt’s Red Sea coast at the beginning of September.

“The LoI is for a five-year FSRU contract expected to generate an average annual EBIDA [earnings before interest, depreciation and amortisation] of around $40m,” Hoegh LNG said on Monday.

This would equate to approximately $130,000/day in charter revenue, based on 350 days of operating days per year, and $15,000/day in operating costs.

The EBIDA represents the earnings before interest, depreciation and amortisation but “after local Egyptian tax expected to be paid under the contract”, Hoegh has said.

The contract involves the hire of the 170,000cbm Hoegh Gallant, currently in the final construction phase at South Korea’s Hyundai Heavy Industries (HHI) shipyard. The vessel is due to be delivered from the shipyard in June.

Once it arrives in Egypt, the FSRU will be moored at a jetty at the port of Ain Sokhna to the southeast of the Suez Canal. The jetty has been finalised as part of EGAS’ workscope, Hoegh said, paving the way for the FSRU to start operations in the third quarter.

EGAS is understood to have signed preliminary LNG supply agreements with various counterparties, including London-based Gazprom Marketing & Trading (GM&T) and Paris-based energy firm GDF SUEZ. Ludovic Aldersley

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