A Sleepy Port Wakes Up...To A Sea Of Natural Gas

Egyptian businessman Wael Leheta remembers having to leave his hometown of Port Said in a hurry when he was 11. World War II had broken out, and Germany hoped that by bombing the port it could close down the Suez Canal--and with it Britain's vital shipping lane to India. Leheta's family took up temporary residence at Damietta, 50 kilometers to the west. "Every night for months, we would watch as the eastern sky lit up white and yellow," Leheta recalls.

The 20th century has not been kind to Port Said. The town, with its elegant shopping arcades along stately colonnaded sidewalks, was bombed by the Germans in both world wars, shelled by the British and French in 1956, and battered by the Israelis during the 1967 and 1973 wars with Egypt and from time to time in between. But with the guns silent, Leheta hopes that the same strategic location that long attracted bombs will now attract something far more appealing: business. He has been a driving force on a project to build a billion-dollar hub port for container cargo and an adjoining industrial zone that will soon transform the face of the town.

The port's formula for success is its position at the northern entrance to the Suez Canal, the route taken by nearly all the cargo between Europe and East Asia. Ships passing through the canal bound to or from Europe will be able to unload the Eastern Mediterranean portion of their cargo at a quay only a few meters off their course. Smaller ships will feed the cargo to regional ports while the mother ship continues on. "Even a small deviation for a big container ship costs a hell of a lot of money," says Barbara Joziasse, head of the economic and trade department at the Dutch Embassy in Cairo.

Already, dredgers are at work deepening the branch channel to the east, where the quay will lie, and a contract to help build and operate the new port is being wrapped up with the Dutch company ECT International. The dredged mud is used to fill in the lagoons and salt flats where the new berths and industrial zone will be. It was much the same for the original town, which was built on the fill left over when the canal was dug in the 1860s. The new hub port is scheduled to begin unloading its first container ships within 2 1/2 years.

SEVERAL RIVALS. Sounds like a winner, but will it all come together? Container-cargo hubs are a fixture of commerce in East Asia, Europe, and the U.S., but the concept is relatively new to this part of the world. Shippers say that with efficient ports in Israel, Turkey, and Cyprus--and even in southern Italy at Gioia Tauro--eager to grab a share of the growing business, Egyptians will have to prove they can regain the necessary work ethic after decades of socialism. Long gone are the days at the turn of the century when hardy southern Egyptian workers earned Port Said the reputation of being the world's fastest coaling station. But if the plans do succeed, the town, which still exudes its colonial atmosphere of old, may once again become a thriving entrepot.

Among the first manufacturers the new industrial zone will try to attract will be those that use natural gas as a raw material, such as fertilizer plants, says Mohamed el-Masry, chairman of the Port Said Chamber of Commerce. The town is practically floating on the stuff. In the last few years, ENI, BP-Amoco, and other companies have found huge natural-gas fields, including Egypt's largest, offshore in the Mediterranean Sea and others onshore in the nearby Nile Delta, elevating the status of the area to that of a world-class natural-gas basin.

Their problem has been how to get the gas to market. Now, the gas is being piped to a collection center on the coast just west of Port Said and from there into the national grid for domestic consumption.

So far, there are at least three--not necessarily competing--projects to export gas on the drawing boards, each fraught with its own political and economic considerations: an overland pipeline to Israel, an undersea pipeline to Turkey, or an all-purpose gas liquefaction plant and export terminal. (To make economic sense, gas must be liquefied to fit the confines of a ship.) Whichever plan is chosen, it will mean more business, and Port Said's economy will be the winner.

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