After two years of negotiations, the Petroleum Ministry has finalized an agreement to dock a floating natural gas import terminal at the Ain Sokhna port on the Red Sea, the ministry announced Wednesday.
In November 2014, Egypt signed an initial contract with the Norwegian firm Hoegh LNG to rent a floating terminal that would allow the country to receive ships importing liquefied natural gas (LNG). The terminal is expected to be operational by the end of March.
Although Egypt has two natural gas exporting plants, it currently lacks the specialized facilities needed to import LNG. The fuel must be converted from a liquid to a gaseous state before it can be fed into the country’s natural gas grid.
Egypt relies heavily on natural gas to fuel its power plants and industry, and gas shortages in recent years have led to power outages and reduced output in energy-intensive industries.
Since signing the deal with Hoegh, Egypt has made a series of steps toward securing natural gas imports.
In late 2014, the Petroleum Ministry confirmed that the state-owned Egyptian Natural Gas Company (EGAS) called for bids to supply Egypt with at least 48 shipments of LNG per year. The total number of shipments sought remains unclear.
On Sunday, Reuter’s news agency reported that EGAS awarded US$2.2 billion worth of LNG import contracts to four international firms.
In a separate deal in December 2014, Egypt and Algeria signed a contract for Algeria’s Sonatrach to supply Egypt with six LNG shipments between April and September 2015. Overall, the deal will bring in 750,000 cubic meters of gas during the summertime months, when Egypt’s demand for energy peaks.
The ministry has also been in talks with Russia’s Gazprom, and is expected to reach an import agreement with the company later this month.