ENEL, Italy’s largest utility by generation capacity, says it signed a cooperation agreement with Egyptian Natural Gas Holding Company that will give it access to Egypt’s natural gas, as it seeks to boost supply of the fossil fuel.
The agreement allows Enel to enter Egypt’s upstream market, targetting the growing liquefied natural gas sector as the Italian company plans to boost supplies and diversify its sources, Enel says in a statement. Enel didn’t provide any investment figures.
The agreement allows for a gas supply of at least 1 billion cubic metres a year, says chief executive Fulvio Conti at the signing ceremony in Cairo.
The two companies are looking at a supply of about 2 billion cubic metres of gas a year (bcm/year), although discussions are still taking place, a person familiar with the matter says.
Enel plans to build an LNG-receiving terminal in the Italian island of Sicily by the end of 2011 for an investment of more than €600 million ($881 million). The terminal, in Porto Empedocle, will have an annual full capacity of 8 billion cubic metres, or almost 10 per cent of Italy’s current gas demand.
“We are showing great interest to the Mediterranean basin and Middle East for the diversification of our supplies,” Gianfilippo Mancini, head of Enel’s energy management business area, says.
Italy is seeking to boost its LNG facilities to meet the country’s growing dependency on gas to generate electricity and weaken Russia’s and Algeria’s supply stranglehold, which when combined supply about 70 per cent of the peninsula’s gas imports. As part of thes accord between Enel and Egas, the Rome-based company will have a stake in one or more Egyptian gas fields, as well as partially own an LNG terminal as it seeks access to supplies of gas in liquefied form.
The agreement will also allow Egas to enter Europe’s gas market for the first time - Enel will jointly sell the fossil fuel in those countries where it operates. “We greet with great satisfaction the start of the alliance between Enel and Egas,” says Egypt’s oil minister Sameh Fahmy. “It will help a further expansion of Egas in the international gas market.”
Large gas suppliers to Europe, such as Algeria’s Sonatrach and Russia’s OAO Gazprom, are targeting higher-paying end users downstream – both commercial and domestic – to boost their profits.
