Egypt to complete talks on gas imports and border marking at Crete summit

President Abdel Fattah al-Sisi will participate in a trilateral Egyptian-Greek-Cypriot summit on the Greek island of Crete on Wednesday. The talks concern implementing an agreement to export Cypriot gas to Egypt, and the final details of a maritime border demarcation agreement between the three countries, government sources told Mada Masr.

Last month an agreement to establish a direct pipeline between Egypt and Cyprus was signed by Tarek al-Molla, Egypt’s minister of petroleum and mineral resources, and Yiorgos Lakkotrypis, Cypriot minister of energy, commerce, industry and tourism. The pipeline will transport natural gas from Cyprus’ Aphrodite gas field to the liquefaction plant in Idku, east of Alexandria, where it will be liquified and then re-exported to various markets.

The pipeline should have a capacity of 700m cubic meters annually and start pumping gas into Egypt by 2022, according to a government source who spoke to Mada on condition of anonymity. According to the source, some of the gas imported from Cyprus will be used in the local market and some exported.

Egypt and Cyprus agreed that the delivery point for the gas would be the Idku plant. Royal Dutch Shell, which owns a major stake in the plant, will handle the importation. Shell is partnering with American company Noble Energy to develop the Aphrodite field.

Aphrodite’s partners are expected to sign an agreement during the fourth quarter of this year on details of the pipeline, cost, and quantities of gas to be transported. Shell and Noble Energy will bear the pipeline’s cost, which is predicted to come to between US$800 million and $1 billion. It is expected to be completed in three years’ time.

Egypt currently has two liquefaction plants. The Idku plant has two liquefaction units. The second, in Damietta, is owned by Italian-Spanish JV Union Fenosa and has just one unit.

The government has a stake in the Idku plant through two state-owned entities. The Egyptian Natural Gas Holding Company (EGAS) and the Egyptian General Petroleum Corporation (EGPC) each own a 12 percent stake. Shell and Malaysia’s Petronas each own a 35.5 percent stake, while France’s ENGIE owns 5% percent.

Egypt plans to import gas from other Mediterranean countries, mostly Israel and Cyprus, then treat and liquify it to export to Europe. Molla has repeatedly stated that the country will become a “regional energy hub.”

After four years in which Egypt imported liquified gas from abroad to compensate for a production shortage, last month Molla announced that it would no longer import liquified natural gas after a final shipment during the last week of September. In 2014 daily gas consumption in Egypt was 5 million cubic meters per day in 2014, while its production was 3.8 billion cubic meters per day, according to official figures, which is why imports began.

Molla said that Egypt had become self-sufficient again due to increased production in the offshore Mediterranean Zohr gas field: it has increased six-fold since January from 350 million cubic meters per day to 2 billion. Other gas fields have also started producing, increasing Egypt’s overall production to 6 billion cubic meters per day.

Wednesday’s meeting is the sixth summit between Egypt, Cyprus and Greece. The first was held in Cairo in November 2014.

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