Eni expects ‘some’ LNG cargoes from Egypt next winter

Italian energy firm Eni expects to export “some” liquefied natural gas cargoes from the Damietta terminal in Egypt next winter as the country turns to imports of LNG to secure gas supplies.

According to a recent report by Wood Mackenzie, the Egyptian Natural Gas Holding Company (EGAS) has chartered Hoegh LNG’s floating storage regasification and storage unit, Hoegh Galleon, to deploy it in the Ain Sokhna port and address potential gas shortages in its domestic market.

The charter is for a period of 18 months, starting in June this year, the report claims.

Also, local media in Egypt suggest that the country has stopped all LNG exports from May to meet its domestic demand.

Besides the Damietta terminal, Egypt has the Shell-led Idku LNG facility.

Asked about the overall outlook for LNG exports out of Egypt this year during Eni’s first quarter results call on Wednesday, Cristian Signoretto, director global gas and LNG portfolio, said, “clearly, the first quarter of this year, we have seen a steep reduction of export capacity from Egypt due to the supply and demand imbalance and the Middle East situation.”

He said this summer the country expects to bring LNG from “outside”.

“We think that the next winter season could be another window of opportunity to export some LNG cargoes, clearly not many, vis-a-vis the past, but given the strong seasonal demand and supply balance of Egypt, we still think that there is a window of opportunity for the next winter to be exporting some cargoes,” Signoretto said.

Guido Brusco, Eni’s chief operating officer natural resources, said in the fourth quarter earnings call that Eni shipped three cargoes from Egypt in December last year.

“And we are foreseeing between 8 to 10 cargos in the forthcoming months before the end of the winter season,” he said in February.

LNG demand

Eni said its LNG sales in the first quarter of this year were flat compared to 2023.

The company sold 2.7 bcf (2 million tonnes of LNG) in the first quarter of this year. Quarterly sales rose compared to 2.4 bcm in the previous quarter.

During the first quarter, Eni shipped the first LNG cargo from its Tango floating LNG facility moored in Congolese waters and this shipment recently arrived at Snam’s FSRU-based facility in Piombino.

Signoretto also discussed LNG demand in Europe and around the globe during the call.

He said that Eni previously announced during its capital market update that the company sees “still a very finely balanced market for Europe, and actually for the world, in the next at least 12 to 18 months.”

“And this actually is the case because, I mean, we are seeing in Asia and especially in China, a pickup in the demand. In the first three months, we have seen 17 percent of LNG growth in that area in China,” he said.

“And it is true that demand in Europe has not been very robust because of the weather. But if you look at the fundamentals, we are seeing some pickup in the industrial demand,” he said.

“We have seen also countries like Egypt, as we said before, flipping from being exporter to being importer, and that actually gives another, let’s say, story into the balance of the LNG market,” he said.

He also mentioned that two out free trains at the Freeport LNG terminal in the US are offline for maintenance.

“So, let’s say, a few million tons of LNG really can change the balance of the market.

“We, again, we think that the summer will be still volatile because of this situation. Clearly, also the geopolitical situation can add on to that. We know also that there is uncertainty about the end of the Russian transit in Ukraine by the end of this year. So, we feel that the next 12 months could be still interesting and volatile from a market perspective,” he said.

Interest in long-term LNG contracts

Eni is also in talks with buyers to sign long-term LNG contracts for its LNG projects.

Asked about negotiations for long-term LNG contracts, including for Congo and the second Mozambique FLNG project, Brusco said during the call said that “there is appetite, particularly in the Far East where there is interest to sign long-term contracts.”

“Clearly, this is based on the view of those players on the growth of the economies and also the pace of the phaseout of coal in the energy mix of that part of the world,” he said.

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