Egypt Arbitration Tussle Drags On: Naturgy

Spanish utility Naturgy said December 28 its Union Fenosa Gas (UFG) joint venture has won a key UK case enforcing its rights under an earlier arbitration victory against Egypt, but that the latter had lodged an appeal against that original award.

UFG, owned 50-50% by Eni and Naturgy, on August 31 was awarded compensation of $2.031bn before interest against the Egyptian government by an arbitration tribunal in resolution of a lawsuit filed in 2014 – an amount estimated at $2.205bn including interest in early September.

Naturgy said that UFG began court cases to enforce that arbitration award in various jurisdictions. As a consequence of that, Naturgy said that on December 19 UFG secured recognition from the English High Court of Justice of the August arbitration award, and is now awaiting resolution of a similar procedure initiated in the US.

The Naturgy statement gave no indication of whether any of the compensation award had been paid over by Egypt.

However, Naturgy acknowledged that Egypt on December 21 presented an appeal against the August 31 ruling to the same arbitration tribunal - the World Bank’s ICSID. Naturgy expressed confidence this appeal should not lead to any delay to the "restart in the shortest possible time” of the Damietta LNG facility in Egypt (80%-owned by UFG) that was idled in 2012. Its idling, due to Egypt halting the supply of gas to the facility, prompted UFG to file its lawsuit against Egypt in 2014 claiming loss of income. 

Egypt stopped importing LNG this autumn and became a net LNG exporter instead and so is expected to need both the country's export plants at Idku and Damietta.