Egypt has signed a contract to rent a floating natural gas terminal on Monday after two years of negotiations, allowing the country to buy liquefied natural gas on the global market.
State gas company EGAS has signed a Floating Storage and Regasification Unit (FSRU) Time Charter Party (TCP) contract with Höegh LNG Holdings Ltd. for a period of five years, which will come into effect by the end of the first quarter of 2015, according to a statement by Höegh LNG Holdings Ltd.
The deal is expected to generate an average annual EBITDA of around US$40 million.
EGAS had called for bids to supply a terminal in October 2012. At the time, it was seeking to have a terminal in place by May 2013. When the project was initially proposed, experts thought the timeline was optimistic but possible. Several global firms rent the terminals, and once an agreement on terms and payment is reached, the necessary infrastructure can be put in place quickly.
However, the deadline has since been pushed back repeatedly, leaving Egypt to suffer through two summers without a way to import natural gas, which the country relies on heavily for both industry and electricity generation. No official explanations have been given for the extended delays.
“We are delighted to have signed a firm contract with EGAS and been entrusted through this contract to provide strategic important infrastructure that will give EGAS added capacity to serve the Egyptian gas market,” president and CEO of Höegh LNG Holdings Ltd, Sveinung J.S. Støhle, said.
“This project clearly demonstrates the advantage of FSRUs as the fast-track solution for LNG imports to any market and we look forward to a long term relationship with EGAS. The Höegh Gallant will be offered to Höegh LNG Partners L.P. in due time,” he said.
Egypt has a number of plans in the works to increase its energy supply, including new gas and oil exploration deals, coal imports, nuclear power and renewable energy projects. However, all of these options require extensive infrastructure development before coming online.