Egypt's Cabinet confirms a drone caused the Damietta Port fire

The fire that took the Energos Winter regasification unit out of service at Egypt’s Damietta Port on Wednesday was the result of a drone strike, the Egyptian cabinet said in a statement on Thursday, confirming claims circulating in the international press. Preliminary investigations verified the cause of the attack, though no group has claimed responsibility.

The details: The strike directly hit the regasification vessel, while the adjacent storage vessel was disconnected and remains “100% intact,” Prime Minister Mostafa Madbouly said during his weekly presser (watch, runtime: 1:07:50). Port operations remain unaffected, with 15 ships entering and exiting the harbor normally on the day of the incident, Madbouly added.

The energy fallout: The Energos Winter, which had been pumping 450 mmcf / d into the national grid before the incident, is temporarily out of service and is expected to head to Turkey for damage assessment and repairs, a government official was cited as saying. Separately, the Egyptian government diverted one of four LNG shipments originally scheduled to arrive at Damietta — to the shared Excelerate Acadia FSRU in Jordan’s Aqaba, receiving 100 mmcf /d through the Arab Gas Pipeline for around a month to compensate for the shortfall, a government official was cited as saying.

Gas flows from Israel’s Leviathan and Tamar fields to Egypt rose by 50 mmcf / d to 1.25 bcf / d as of Thursday, hitting the physical ceiling of what the cross-border pipelines can carry, according to an unnamed government official.

Why it matters: Damietta sits on the Eastern Mediterranean's LNG map, and the incident could change the calculus for ins’ers, shipping lines, and European buyers already leaning on Egyptian gas. “The incident's significance hinges on whether it's isolated. If it turns out to be an isolated incident, there are no further repercussions,” Lars Jensen, CEO of Vespucci Maritime tells EnterpriseAM. Repeat incidents would raise the prospect of the conflict widening to the Suez Canal itself, he notes.

IN CONTEXT- The strike also highlights the geography of Egypt’s LNG import infrastructure. Energos Winter is the country’s only FSRU on the Mediterranean coast — the vessel remains moored off Damietta — while Egypt’s remaining regasification capacity is concentrated at Ain Sokhna on the Red Sea.

“This incident is likely to accelerate security upgrades across Eastern Mediterranean LNG terminals,” former head of supply chain and transport industries at the World Economic Forum Wolfgang Lehmacher tells us. A prolonged disruption at Damietta, he adds, would tighten domestic gas balances, reroute Mediterranean spot cargoes, and push up the region's energy-security premium.

What to watch: War-risk premiums at Damietta and other Egyptian ports were elevated before this incident, and could likely climb further based on vessel value, Lori Ann LaRocco, senior editor of guests and global supply chain reporter at CNBC, tells us.

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