The Egyptian Natural Gas Holding Company (EGAS) signed an initial agreement with Russian company Rosneft to supply oil products and liquefied natural gas (LNG) shipments.
The document defines key terms of the future cooperation between the companies in the area of LNG supplies.
The implementation of the terms of the signed document will allow Rosneft to access the high growth potential Egyptian gas market and deepen broader cooperation between the two companies.
Minister of Petroleum Sherif Ismail said that signing the two agreements is a mutual cooperation between public companies in Egypt and Russia. He added that it will support vital cooperation in the oil and natural gas sector.
EGAS signed contracts for 90 shipments of LNG in two years, within an international bid and direct agreement with Gazprom and Sonatrach, to secure the additional needs for power stations.
EGAS Chairman Khaled Abdel Badie said that the shipments of LNG from Rosneft will let local markets fill a gap in their production capabilities until new gas field projects are finalized, Daily News Egypt reported.
He added that the contract will allow a grace period of 30 days to pay for the shipments after delivery, and that each shipment will provide roughly 500 million cubic feet of gas a day for six days.
The preliminary deal involves the delivery of 24 LNG cargoes between 140,000 cubic metres (cbm) and 170,000cbm each, starting from the fourth quarter of this year, says a report in ICIS.
Rosneft has not produced any LNG, nor is it involved in the trading aspect of the business. It is unclear where Rosneft will source the volumes for the LNG deal. Rosneft has existing trading relationships with Vitol, Trafigura and Gunvor, all of which are active in the LNG sector. It is unclear, however, if any of these traders are involved in Rosneft’s LNG supply deal with EGAS.
The deal, which is crude-linked, was structured by Rosneft’s trading subsidiary which is based in Switzerland.
