Union Fenosa in Talks to Resume Gas Supplies to Egyptian Plant

Union Fenosa Gas SA has begun negotiations with Egyptian authorities to get the country to resume natural-gas shipments to its liquefaction plant on the Mediterranean coast after a four-month suspension.

Fenosa, a joint venture between Spain’s Gas Natural SDG SA and Rome-based Eni SpA, filed a formal complaint to the government in February after Egypt stopped supplying the facility. The action “helped local authorities take matters seriously” and has spurred talks, Julio Cesar Gutierrez, a spokesman for Fenosa, said today by telephone.

The plant exports gas to Spain and other countries and can process 7.56 billion cubic meters of the fuel a year. It’s 80 percent-owned by Union Fenosa Gas. The remaining 20 percent is held by Egyptian state companies, according to the venture’s website.

Egypt’s oil minister, Osama Kamal, said today that Fenosa may resort to international arbitration if the government continues to be unable to supply the Damietta plant, according to the state-run news website Ahram Gate, citing comments from Anadolu Turkish state news agency.

The Arab world’s most populous nation halted supply to Fenosa’s Damietta plant to retain more of the fuel for local use. The North African country, which has exported about a quarter of its gas output in recent years, is now curtailing shipments as production ebbs and demand from power plants soars.

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