(Adds Union Fenosa Gas comment, ENI not commenting)
CAIRO May 14 Egypt will only agree to an
arrangement that would see gas exported from a field in Israel
via a liquefied natural gas terminal in Egypt if international
arbitration is resolved, an apparent reference to a dispute with
the terminal operator.
According to a letter of intent signed earlier this month,
the partners in Israel's Tamar natural gas field would export up
to 2.5 trillion cubic feet of gas over 15 years via the plant in
Damietta operated by Union Fenosa Gas - a joint venture between
Spain's Gas Natural and Italy's Eni.
The Union Fenosa Gas plant went idle in 2012 due to a lack
of gas supply from the government in Egypt, where fuel shortages
have prompted the authorities to redirect gas into the domestic
The LNG plant filed a complaint with the International
Chamber of Commerce last year, alleging a state partner had
failed to comply with the contracts.
In a statement issued by the oil ministry on Wednesday, an
official said there could be no Egyptian agreement to the scheme
set out in the letter of intent without "resolution of all
pending trade arbitration cases".
Texas-based Noble Energy, which has a 36 percent
stake in Tamar, said the signatories hoped to finalise a binding
agreement within six months, though any deal will require
regulatory approvals in Israel and Egypt.
"With all the caution necessary in such cases, we see as
positive an announcement of this nature," said a spokesman for
Union Fenosa Gas, who did not want to be named, under company
"While we haven't received a concrete proposal on this, we
would like to believe that this means a clear and real signal of
a desire to negotiate," he said. He also said that Union Fenosa
Gas has always been open to talks and negotiation to resolve the
The oil ministry statement reiterated Cairo's position that
Egypt's permission must be obtained for the agreement to
proceed. This will only happen "if the deal realises high added
value for the Egyptian economy", the official said.
ENI declined to comment.
(Writing by Tom Perry and Shadia Nasralla; Additional reporting
by Stephen Jewkes in Milan and Jose Elias Rodriguez in Madrid;
Editing by David Holmes and David Evans)