Egypt Watch

Union Fenosa Gas pursues fine $2 billion fine against Egypt’s government

Union Fenosa Gas, the operator of the Damietta natural gas liquefaction station, has announced that it is pursuing a $2 billion fine against the Egyptian government, in implementation of the ruling issued by the International Arbitration Centre against the Egyptian government represented by the Holding Company for Natural Gases (EGAS). The Spanish company filed a lawsuit against Egypt in 2013 before the International Chamber of Commerce, after the decision by the Egyptian government to suspend the gas supply to the company’s station in Damietta in 2012 to meet the growing needs of the local market. The company filed another lawsuit to compel Egypt to pay the fine and set a deadline for paying it. The two parties tried to negotiate dropping the arbitration case but talks failed after Egypt did not provide sufficient guarantees, according to a statement from the Spanish company. The Spanish company Union Fenosa and Italy’s Eni own 80 per cent of the shares of the Damietta station, while the Holding Company for Natural Gas owns 20 per cent of the shares.

A court also ordered Egypt to pay the Israel Electricity Company $1.7 billion after gas exports to Israel were suspended after 18 explosions hit the gas pipeline in Sinai. The negotiation process between Egypt and the Israeli company failed, until a settlement was reached whereby Egypt agreed to import gas from Israel even though it didn’t need it.