Eni to set up a fixed regasification unit in Damietta: The Madbouly government is in talks with Italian energy giant Eni to build a regasification unit, with investments of about USD 150 mn, in Damietta, an unnamed government official told Enterprise.

Project profile: The unit will be built on land adjacent to the Damietta LNG facility — operated by a joint venture between Eni and the Egyptian Natural Gas Holding Company (EGAS) — to receive LNG shipments and regasify them, Asharq Business reports. The main objective is to bridge the gap between higher-than-expected local consumption, which was up 12% y-o-y in July, and dwindling domestic gas production.

Where things stand: EGAS has tapped an international consultant to conduct the required studies ahead of building the unit and to explore the possibility of utilizing the Damietta LNG’s storage facilities, which can accommodate over 160k cubic meters worth of LNG, Asharq Business reports.

Remember: Egypt currently has access to two regasification units, one in Jordan’s terminal in Aqaba, which Egypt was given the right to in an agreement inked last year, and a newly-leased Norwegian floating storage and regasification unit currently docked in Ain Sokhna. The state contracted the unit after a fall in domestic production pushed the country from being a net exporter to a net importer of LNG. The government is in talks with Jordan to jointly purchase a new floating regasification unit, with discussion of leasing out the ship to other countries should our supply gap diminish.

But that’s not enough: Our source tells us that Egypt needs at least three regasification units to meet the increasing industrial and commercial demand for gas.

Long-term leases leave the market short on available units: There are currently no regasification units up for lease from manufacturers, since leasing contracts typically extend for 15-20 years, the source told us.

Eni has been showering us with love: Over the past month, Eni has agreed to inject new investments in well-drilling and exploration and development in Egypt’s oil and gas sector. The government’s clearing of USD 1.3 bn in arrears owed foreign oil and gas companies was key to encouraging Eni to further invest in Egypt, our source says.

Locking in low prices: The source noted that the country’s gas needs have been secured until February of next year after the government took advantage of current low oil prices to contract more shipments. Finance Minister Ahmed Kouchouk last week said that the government is moving quickly to take advantage of lower commodity prices amid a meltdown in global markets.

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