Most upstream and downstream operations in Egypt are continuing to work normally amid the country’s widespread anti-government protests and increased political unrest, with exports of LNG from Egypt continuing to be shipped from the country’s two plants according to schedulem, says senior Middle East energy analyst at IHS Global Insight, Samuel Ciszuk.
“The Damietta plant is working normally, if a ship wants to go and load up, it can”, a spokesman for Gas Natural Fenosa, the operator of the Spanish-Egyptian Gas (SEGAS) venture in Damietta on the Mediterranean coast told Reuters, with BG Group—a major stakeholder in the EGAS venture at Idku—also confirming late yesterday that its LNG production and loading was continuing uninterrupted. Meanwhile, exploration projects are starting to report disruptions and delays, mainly as supplies run short and crews are held back from being flown in to Egypt.
The upstream arm of German utility RWE—RWE Dea—has called a force majeure on the contract for the Atwood Aurora offshore rig owned by Atwood Oceanics, which has been working on the North El Amriya concession where it recently made a gas discovery. “We have secured the well and are in the process of halting offshore operations”, Atwood Oceanics said in a media statement, outlining according to Platts that the contract provisions provide for 70% of the US$133,000 day rate to be paid under a force majeure during the first 15 days, and 50% thereafter until the contract is terminated or the force majeure withdrawn.
Croatia’s INA had also temporarily suspended an onshore drilling at its Sidi Rahman oilfield, but like RWE Dea, it was adamant that production operations were continuing without any disruptions.
Several of Egypt’s port operators are, however, indicating problems in the management of their terminals, with a few agents and operators having closed their operations, but most of them still continuing operations at lower-than-usual rates, due to worker shortages amid a curfew, continued ad hoc strikes, and protests in some of the larger port cities—particularly around Egypt’s main port city of Alexandria. GAC—one of the larger international shipping logistics companies active in Egypt—was yesterday quoted by Dow Jones as saying that although ports throughout the country remained open, the curfew could create “some difficulty… in contacts between agents, the Suez Canal Authority, Suez Canal Pilots, and other authorities”, adding that, “The curfew may also affect dry and general cargo operations”.
Significance
Problems are being caused mainly by the deteriorating logistics situation in Egypt at the moment, as the curfew and mass protests disrupt transport lines into the main cities and cause bottlenecks. In the energy industry, as IHS Energy predicted, it is mainly the exploration drillings which are the immediate victims of the disruption, although the country’s downstream sector might soon stop functioning, mainly if refineries cannot shift their products to retailers and petrochemical facilities and see their storage facilities being filled to the brim.
There are already signs that fuel shortages at retail stations in the main cities are fuelling anti-government rage, which could point to an increased risk of further protest escalations, despite President Hosni Mubarak’s promise yesterday that he will refrain from standing for a new term in office later this year.
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Analysis provided by Senior Middle East Energy analyst at IHS Global Insight, Samuel Ciszuk
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