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Friday, September 19, 2014
Spain’s Union Fenosa Gas (UFG) revealed that it may drop a lawsuit against the North African country of Egypt if a deal for the company to import Israeli gas into its idle LNG plant at Damietta goes through.
UFG, a JV largely owned by Gas Natural and ENI, saw exports from the Damietta come to a halt in 2012 when natural gas was diverted to meet domestic needs. The government’s diversion of the gas led UFG to launch a multi-billion dollar lawsuit against Egypt in the International Chamber of Commerce for breach of contract in 2013.
While the possibility of the import of gas to process at the LNG facility is a good thing, UFG has not officially said it would drop the lawsuit completely.
“The arbitration has not been suspended but UFG would be ready to talk about it under certain circumstances … it’s on the negotiation table,” said a source to Reuters requesting anonymity due to the sensitivity of the matter.
UFG’s willingness to drop the lawsuit may help unlock the Israeli import deal after Egyptian authorities in May said that approvals could not otherwise be granted.
BG Group is in talks to import gas from Israel’s giant Leviathan offshore field to its Idku LNG plant in order to revive exports from its plant which have declined sharply.
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