The International Center for Settlement of Investment Disputes (ICSID) awarded $2,013 million, plus interest and associated arbitration and legal costs, to Spain's Union Fenosa Gas (UFG), the owner of the Egyptian Damietta plant, for Egypt's lack of gas supplies to the company in 2014, UFG announced Monday.
ICSID, the World Bank's arbitration institution, ruled against Egypt for the unilateral interruption of gas supplies to UFG's liquefaction facilities in Damietta, according to the UFG press release.
UFG is a stakeholder company shared 50-50 between Spain's Naturgy Energy Group and Italian multinational energy company Eni.
According to the arbitration body, Egypt was responsible for the breach of the bilateral investment protection treaty between Spain and Egypt since the company was not granted the fair and equitable treatment required.
The company also announced that this is the second similar ruling in favor of UFG's claims following the first issued by the Cairo Regional Center for Commercial Arbitration (CRCICA) in the 896/2013 case in December 2017.
The award of $2 billion to the UFG, which took its case to the ICSID in 2014, is likely to be paid in the form of renewed gas supplies to Damietta rather than in cash, international media reported.
UFG has expressed great satisfaction with the award outcome of this long dispute.
The award 'allows the company to reaffirm its commitment to Egypt and its willingness to continue its operations in the country generating wealth, welfare and social development,' the UFG press release read.
'The objective of UFG has always been to reach an agreement with the Egyptian Government based on the payment of compensation for the damages caused, the restoration of supply and the offer of guarantees of contractual compliance in the future,' the press release said.
Natural gas production in Egypt has been in decline, falling from a 2009 peak of 5.8 billion cubic feet per day (bcf/d) to 3.9 bcf/d in 2016, based on estimates of BP’s Statistical Review of World Energy.
'The West Nile Delta, Nooros, Atoll, and Zohr fields were fast-tracked for development by the Egyptian government and have begun production, providing a substantial increase to Egypt’s natural gas supply,' according to the U.S. Energy Information Administration’s country analysis brief on Egypt, updated in August 2018.
By Muhsin Baris Tiryakioğlu
Anadolu Agency
energy@aa.com.tr