Volume 2, issue #16 - 05-06-1997

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Talks under way for gas or LNG from Egypt to Turkey

May 14, 1997 Egypt and Amoco are working on terms of a deal to supply natural gas to Turkey, and one option is to build a pipeline to catch a larger share of the European market.
"We've been diligently examining that potential business opportunity with the Turkish," said Robert Sheppard, President and General Manager of Amoco Egypt. "It is still progressing as one of the options for exporting Egyptian gas into near region markets," he told. He was referring to a MoU signed in November by Egypt, Amoco and Turkish Botas which sees Egyptian General Petroleum Corporation (EGPC) supplying about 10 bn cmpy of LNG to Turkey.Amoco, which said it expected to start deliveries in 2001, is the largest foreign investor in Egypt with more than $ 7.5 bn in Egypt's energy sector, Sheppard said. He said in a speech that the company continued to invest more than $ 175 mm a year and had "plans for staying in the business of producing oil in Egypt for a long time."
Amoco Egypt and EGPC this week named Citibank as financialadviser to the $ 1.2 bn Turkish LNG project. Sheppard said the move meant that they were closer to deciding on terms.
Egyptian Oil Minister Hamdi el-Banbi said in April a new liquefaction plant, for which a site was chosen west of Port Said, would handle 4 bn cm of gas a year.
Sheppard said that substantial investments would not be made until there was a buyer and that there were still costs and volumes to work out with the Turkish side. "I think that their strategy is wanting to diversify their sources, and also the delivery systems. Pipeline is one element but LNG is another. They've indicated to us that they want about 30 % of their total energy requirements via LNG."
EGPC Chairman Abdel Khalek Ayad told that a pipeline to take natural gas from Egypt to Turkey remained under discussion, alongside plans to export LNG by tanker. "We are studying seriously a pipeline to stretch up to Turkey or to any place in Europe, trying to capture the expanding gas market in Europe."