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Major EIB financing of LNG Plant in Egypt

Source: www.oilegypt.com 12/22/2003, Location: Africa

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The European Investment Bank (EIB), the European Union's long-term financing institution, is providing a loan of USD 372 million, for the construction of the first “train” of a liquefied natural gas (LNG) plant at Idku, some 40 km east of Alexandria.

This loan, one of the largest ever financings provided by the Bank in the Mediterranean Partner Countries (MPCs) is provided under the Bank’s "Facility for Euro-Mediterranean Investment and Partnership” (FEMIP). The borrower, El Behera Natural Gas Liquefaction Company, is a joint venture bringing together the major international gas groups: British Gas (35.5%), Petronas (35.5%) and Gaz de France (5%) with the public sector Egyptian General Petroleum Corporation - EGPC (12%), and Egyptian Natural Gas Holding Company - EGAS (12%).

This is a prime example of the EIB’s catalyst role in investment in the MPCs. The Bank’s experience in Egypt, its longstanding financial relationship with the principal project promoters, the mitigation of the political risks (under the EuroMed portion of the loan package) and the Bank’s capacity to attract long-term commercial funding and guarantees on this transaction are viewed as decisive factors by the Government of Egypt and the project sponsors

The project involves technology transfer to Egypt through the participation of three major international companies. The gas comes from the West Delta Deep Marine concession and will be dedicated to export, through a 20-year take-or-pay agreement with Gaz de France, a well-known and experienced LNG off-taker. Priced competitively, the LNG is likely to find markets also elsewhere in the Ub nion. In exporting a part of the large Egyptian natural gas reserves, the project will benefit the country’s economy by generating substantial foreign exchange revenues.


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