Citadel Capital has agreed with Qatari investors to import liquefied natural gas into Egypt.
Citadel Capital forming joint venture to bring Qatari gas into Egypt
Citadel Capital and a group of Qatari investors are to form a joint venture to position a floating liquefied natural gas storage and regasification unit (FSRU) off the Egyptian coast to help fill the country’s fuel gap from the middle of next year.
Egypt is a net exporter of gas, with two LNG terminals and a pipeline providing much-needed foreign currency earnings. However, recently the country has been forced to divert some gas intended for export to meet rapidly growing domestic demand after summer fuel shortages and power cuts.
The Qatari investment group, organised by QInvest, will hold a 51 per cent interest in the planned joint venture, with Citadel Capital, the private equity giant, holding the balance. “We believe that Egypt is in strong need of additional natural gas to feed the power generation sector and supply Egypt’s industrial base with a reliable, clean source of energy,” said Ahmed Heikal, the Citadel chairman.
“Citadel Capital has very strong technical skills in this sector and unrivalled knowledge of the current and planned large consumers of natural gas, thereby putting us in a unique position to market imported natural gas in Egypt.”
This is Citadel Capital’s second large project in Egypt’s energy sector with Qatari investors, following this year’s successful establishing of a US$3.7 billion (Dh13.59bn) financing package for the Egyptian Refining Company, in which Qatar Petroleum International is a key shareholder.
According to the agreement, the joint venture will import LNG, heat it back into gas on board the FSRU vessel then pump it into the Egyptian national gas grid to help meet demand from large users, such as power stations.
FSRUs, usually converted oil or gas tankers, are attractive to many new LNG importers because they are much cheaper and quicker to set up than permanent regasification facilities that can cost billions of dollars.
As the ships can be relocated during periods of lower demand, FSRUs are increasingly popular solutions to soaringenergy demand in countries where gas demand is highly seasonal.
As most of the LNG will come from Qatar, the location of the FSRU facility is likely to be on Egypt’s Red Sea coast so that tankers do not have to navigate the Suez Canal.