Damietta LNG (SEGAS LNG)

Image Source : Harvey Milton – SEGAS LNG

Location : Damietta

Sharp increase in electricity demand, coupled with introduction of stringent environmental regulations, mandated the Spanish utility giant Union Fenosa to look for new sources to import gas for cleaner power generation in the mid 90’s. In 1998 Union Fenosa Gas (UFG) was founded and in 2000 the company signed a contract with Egypt for constructing an LNG plant along with supporting facilities at Damietta, 60 kms from Port Said. Its location at the mouth of the Suez Canal gave the plant ease of access to European, American and Far Eastern markets. Construction on the 1.2 million square meter plot began in 2001-2002, leading to first cargo exported on board the Cádiz-Knutsen on January 20, 2005.¹

The $1.6 billion plant, with a capacity of 5.5 MMTPA, not only put Egypt on the world map of LNG exporting nations, but also represented the largest single train liquefaction capacity in the world at that time. The operating company SEGAS is owned 20% by Egyptian state companies while the major 80% stake is held by UFG (a 50/50 joint venture between Spain’s Naturgy and Italy’s Eni). The plant was supplied with gas from the Scarab Saffron Fields through a 5-year agreement with the BG Group, which in 2008 was reinforced by an agreement with BP Egypt for supply of 310 million cubic feet per day.² Union Fenosa guaranteed to sell 3.2 MMTPA of LNG for 25 years, while the spare capacity was taken up by EGAS through the first of its kind LNG tolling agreement in 2003.

The construction of the plant involved 1.2 million engineering manhours, in addition to 38 million construction manhours. 20% of the work was sourced from local companies. In 2011 there was major uproar in the community with regards to the environmental damage caused by the developments at Damietta. Allegedly the water waste from the LNG plant did not conform to local environmental laws and and was linked with the depletion of marine life in the area.³

The facility has ample space allocated for the construction of 2 more trains of similar capacity. In 2005 SEGAS proposed a second train, however the expansion was postponed due to limited gas reserves and increasing local demand. Political unrest coupled with the decline in availability of natural gas to the plant led to the eventual shut down of the plant in 2013. The plant has not exported LNG since end of 2012.⁴ This sparked off a series of international contractual disputes, which culminated in a $2 billion settlement awarded by the World Bank’s International Centre for Settlement of Investment Disputes in September 2018. The amount is expected to be settled through supply of gas and UFG is in talks to relaunch operations in 2019.

OWNERSHIP (Equity %)

Union Fenosa (Union Fenosa Gas Partnership)	40.00%
Eni (Union Fenosa Gas Partnership)	40.00%
Egyptian General Petroleum Corporation (EGPC)	10.00%
Egyptian Natural Gas Holding Company (EGAS)	10.00%

General Data

Estimated Capital Cost (USD)	1.3 B
Plant Type	Onshore Stick-built
Plant Stage	Operating
Final Investment Decision (FID) Year	2001
FEED Contractor	M. W. Kellogg (KBR Inc.)
EPC Contractor	M. W. Kellogg (KBR Inc.) JGC Corporation Tecnicas Reunidas SA
No. of Trains / capacity	1 Train / 5 MMTPA
Production Start Year	2005
Products	LNG
Gas Type	Non-associated Gas (NAG)

Technical Data

Cooling Media	Air
Liquefaction Technology	APCI AP-C3MR/SplitMR®
Refrigeration Train Details:
Propane – HP Mixed Refrigerant (MR) String
Driver	GE MS7121EA DLN1 (Frame 7EA) Heavy Duty Gas Turbine
Propane Compressor	3MCL1405 GE (Nuovo Pignone) Horizontally Split Centrifugal Compressor
High Pressure (HP) MR Compressor	GE (Nuovo Pignone) Radially Split Centrifugal Compressor (BCL)
Starter/Helper Motor	Siemens 17 MW Synchronous Motor with VSD System
LP – MP Mixed Refrigerant (MR) String
Driver	GE MS7121EA DLN1 (Frame 7EA) Heavy Duty Gas Turbine
Low Pressure (LP) MR Compressor	AN200 GE (Nuovo Pignone) Axial Compressor
Medium Pressure (MP) MR Compressor	GE (Nuovo Pignone) Horizontally Split Centrifugal Compressor (MCL)
Starter/Helper Motor	Siemens 17 MW Synchronous Motor with VSD System
Power Generation	5 x Hitachi H25 Gas Turbine Generators

Refrigeration Train Configuration

Key Facts

SEGAS LNG was the first project of its kind to be promoted and financed by a company other than the established international oil and gas players.¹
The project is the first base load LNG plant to process feed gas from the national grid, based on a unique “tolling” scheme. Gas is supplied by UNION FENOSA GAS and EGAS, who utilize 60% and 40% plant capacity respectively. The plant processes the gas and in turn receives a tolling fee for the liquefaction process.¹
With in-house N₂ production, power generation, seawater treatment, etc., the plant is completely self-contained and autonomous, requiring only water and gas. The facility was designed for two feed gas compositions, a lean gas and a rich gas, both supplied to the LNG plant from the national grid. The plant is quite flexible and has successfully adapted to the varying grid characteristics.¹
LNG carriers of varying capacities between 40,000 to 200,000 m³ can be loaded at a rate of 12,000 m³/h from the 150,000 m³storage tanks.¹
During peak construction, around 8,500 specialized workers delivered a total of 36 million man-hours. Of these 97% were Egyptian and 35% of the final investment was made in Egypt.¹
The first vessel was loaded in less than 38 months from the EPC contract and only 52 months from the SPA gas contract. This was 30% faster than the existing industry benchmark.¹
Post its first general overhaul, in 2006, the plant demonstrated 90.2% availability, with 8.2% unavailability attributed to planned outages and 1.6% unavailability on account of unplanned events. By the end of 2006, the plant had already produced 16.6 million m³ of LNG and dispatched 121 vessels.¹
In 2006, expansion plans were initiated for a second train capable of producing 5.5 MMTPA of LNG, however in June 2007, complications in securing committed gas supplies postponed the FID.²
The environmental impact assessment (EIA) was prepared by Komex for a two-train complex with a second train integral to the original plan.²
Air cooling was preferred over seawater cooling for the facility for various reasons, including cost, reliability, efficiency, operability, environmental impact etc. Waste heat recovery improves the overall plant efficiency by providing process heating.⁵

SEGAS / Damietta LNG Timeline:

2004 – November 2004, Plant commences operations
2011 – Egyptian Revolution and rise in domestic gas consumption disrupt gas exports.⁶
2012 – Decline of domestic gas output from fields. July 2012, exports completely cut off after terrorist attacks on the pipelines.⁷
2013 – The plant operations stopped. April 2013, Union Fenosa Gas (UFG) filed a complaint against EGAS with the ICC International Court of Arbitration.⁸
2014 – February 2014, an ICSID (International Centre for Settlement of Investment Disputes) claim filed by UFG under the 1992 Egypt-Spain bilateral investment treaty against EGPC and EGAS.⁹
2015 – Egypt became a net gas importer from being a net gas exporter and deployed two Floating Storage Regasification Unit (FSRUs) in Ain Sokhna to serve as the import terminals.¹⁰
2016 – June 2016, ICC tribunal rejected claims for contractual penalties worth more than US$270 million but the case still continued.⁹
2017 – Eni produces its first gas from Zohr field, the largest ever discovery of gas in the Mediterranean Sea made in 2015 with reserve in excess of 30 Tcf (Trillion cubic feet).¹¹
2018 – September 2018, a $2 billion settlement was awarded by the World Bank’s International Centre for Settlement of Investment Disputes. A resolution was made for the dispute to be settled in the form of renewed gas supplies to Damietta rather than in cash.October 2018, Egypt formally ended its LNG imports that started in 2015.^12,13
2019 – Operations to re-launch at Damietta LNG facility as announced by Eni’s Finance Chief, Massimo Mondazzi.¹⁴