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Wed 24 Oct 2012 05:39 PM

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Egypt says in talks for Qatar LNG deal

Prime Minister Hisham Kandil says deal will help avoid fuel shortages, electricity cuts

Egypt says in talks for Qatar LNG deal

Egypt, a gas producer and exporter, has agreed to import Algerian gas and is in talks with Qatar for a similar deal, the prime minister said on Wednesday, a move that may help Egypt meet its own export contracts while domestic demand rises.

Egypt has two liquefied natural gas (LNG) plants and a pipeline to export gas, but energy industry sources say the government has been diverting some gas contracted for export to the domestic market, which suffered fuel shortages and electricity cuts in the summer.

"We have reached a general agreement with the Algerian side to import gas from Algeria but the amount is still under negotiation," Prime Minister Hisham Kandil told reporters after returning from a trip to Algiers this week.

He said Cairo was also studying importing Algerian crude oil to Egypt, where it would be refined. Kandil said an Algerian delegation would visit Egypt after the Eid al-Adha holiday, which falls over the weekend.

In addition, he said Egypt was in talks with Qatar to import liquefied natural gas (LNG) to cover Egypt's needs. Qatari Emir Sheikh Hamad bin Khalifa al-Thani held meetings in Cairo on Wednesday.

"This is in order to cover Egypt's needs in the local market and to prevent using fuel oil which is used now in electricity plants and which has negative effects on electricity plants," the prime minister said.

Qatar, which is the world's largest LNG producer, said in September it would invest $18 billion in tourism and industry projects along Egypt's Mediterranean coast over the next five years, in a bid to support the battered economy.

Egypt has also been seeking support from other Arab states and the international community after political turmoil following the uprising that ousted Hosni Mubarak last year encouraged many investors and tourists to pack up.

"We are pushing hard to attract investments. We have investment agreements worth $18 billion along the Mediterranean sea," Kandil said.

The projects previously cited include $8 billion for gas, power and iron and steel plants at the northern entrance to the Suez Canal and $10 billion for a giant tourist resort on the Mediterranean coast.

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