April 9, 2008 / 11:02 AM / 11 years ago

UPDATE 1-Enel signs major gas deal with Egypt's EGAS

(Adds details, background)

CAIRO, April 9 (Reuters) - Italy’s biggest utility Enel (ENEI.MI) will explore for gas in Egypt and has agreed to sell gas jointly with Egyptian Natural Gas Holding Co. (EGAS), Enel Chief Executive Fulvio Conti said on Wednesday.

Under the deal the companies will sell Egyptian gas in all Enel’s markets, which include Spain.

Enel, which aims to diversify energy supplies and become a vertically integrated energy group, will be supplied with at least 1 billion cubic metres of natural gas under the deal, Conti told reporters.

Under the cooperation agreement, Enel will invest about 1 billion euros ($1.57 billion) in Egypt where it will participate in one or more gas fields and take a stake in a liquefied natural gas (LNG) plant.

Enel is also looking to secure LNG supplies from Algeria, Qatar, Nigeria, the United Arab Emirates and may buy stakes in LNG plants in those countries, a source close to Enel said.

The source said state-owned EGAS would supply about 2 billion cubic metres to Enel’s planned 8 billion cubic metre LNG import terminal at Porto Empedocle in Sicily.

Italy imports about 85 percent of its natural gas to cover its growing domestic demand. Algeria and Russia are Italy’s major gas suppliers, but the country aims to diversify supplies with LNG. Italy has one LNG plant, built in the 1970s.

Enel hopes to receive all authorisations for the 600 million euro Porto Empedocle project by the end of this year and then build the terminal within three years.

Reporting by Francesca Piscioneri via Rome Newsroom, Editing by Margaret Orgill

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