Egypt and Germany Negotiate Terms for FSRU Charter Agreement

Egypt and Germany are negotiating terms for leasing a Floating Storage and Regasification Unit (FSRU). Discussions began in February and continue with the aim of finalizing contracts later this month. As Egypt shifts from LNG exporter to importer, the country is enhancing its gas infrastructure with new FSRUs to meet growing domestic demands, particularly during summer months.

Recent discussions between Egypt and Germany centered on the terms for leasing a Floating Storage and Regasification Unit (FSRU). Accompanied by Yassin Mohamed, the managing director of the Egyptian Natural Gas Holding Company (EGAS), Minister Badawi held meetings with German officials to negotiate contract specifics, as stated by the Egyptian Ministry of Petroleum and Mineral Resources on Wednesday. The negotiations commenced in late February during meetings in Cairo.

No announcement has been made regarding the finalization of the charter agreement as discussions continue about the lease terms. Earlier in the month, following his engagement with German officials at CERAWeek in Houston, Badawi disclosed intentions to sub-charter the FSRU from the German government. A visit from a delegation of Egyptian experts to Germany is anticipated by month-end to finalize the charter conditions.

Meanwhile, Deutsche ReGas has recently canceled its charter contract for the FSRU Energos Power, which operates at the Mukran LNG import terminal. The charter deal with the German government, initiated in 2023, extends for ten years. According to AIS data, the FSRU is currently positioned offshore Denmark’s Skagen.

Egypt has transitioned from being an LNG exporter to an importer due to decreasing domestic gas production and rising demand, particularly for cooling during heatwaves. To accommodate growing natural gas demands, Egypt hosts the 170,000-cbm Hoegh Galleon FSRU at Sumed port in Ain Sokhna, and a second unit, the 160,000-cbm Energos Eskimo, is expected to arrive in June 2023.

In December 2024, EGAS finalized a charter with New Fortress Energy for the second FSRU, which is projected to satisfy the increasing domestic gas requirements, especially during peak summer periods. This strategy aligns with national efforts to provide stable electricity supplies supported by natural gas. Currently, Egypt imports LNG through Hoegh Evi’s Hoegh Galleon located in Ain Sokhna.

The ongoing negotiations between Egypt and Germany regarding the FSRU lease highlight significant developments in Egypt’s energy strategy, particularly its shift from LNG exportation to importation. The expected arrival of additional FSRUs, alongside the proposed visit of Egyptian specialists to Germany, demonstrates Egypt’s commitment to securing its natural gas supply amid rising domestic demands. This partnership with Germany also reflects broader trends in the global energy landscape as countries adapt to changing energy needs.

Original Source: lngprime.com