Naturgy, Eni Reach Agreement With Egypt Government in LNG Dispute -- Update

--The deal signals the restart of the Damietta liquefaction plant, which has been at the center of the disputes between Union Fenosa Gas and the Egyptian government

--UFG's participation in the Damietta plant will be transferred to Eni and state-owned Egyptian Natural Gas Holding Company

--Eni will take over the contract for the purchase of natural gas for the plant and receive corresponding liquefaction rights

By Giulia Petroni

Naturgy Energy Group SA and Eni SpA have agreed the terms to "amicably" resolve the disputes concerning Union Fenosa Gas SA with the Egyptian government, the companies said Thursday.

The agreement values UFG--a 50/50 joint venture between Naturgy and Eni--at a total consideration of $1.5 billion, said Naturgy. Of this amount, $1.2 billion is related to Egyptian assets and $300 million to assets outside the country.

As part of the agreement, Naturgy said it would receive a cash payment of $600 million, along with most of the assets outside of Egypt--excluding activities in Spain--and end its joint venture with Eni. The Italian oil major will take over commercial activities of natural gas in Spain.

"The completion of the transaction will result in Naturgy's departure from Egypt and the end of its joint-venture with Eni, having no obligation in the future to buy liquefied natural gas from the country," Naturgy said.

The deal paves the way for the restart of the Damietta liquefaction plant--which is expected by June 2020--after it was closed in 2012, Eni says.

UFG's 80% participation in the Damietta plant will be transferred to Eni and state-owned Egyptian Natural Gas Holding Company, which will get a 50% and 30% respectively, according to the Italian company.

Eni also said it would take over the contract for the purchase of natural gas for the plant and receive corresponding liquefaction rights.

The parties are expected to execute the transaction in the first half of the year, Naturgy says.

Write to Giulia Petroni at [e-mail]

(END) Dow Jones Newswires

February 27, 2020 11:12 ET (16:12 GMT)

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