EGAS, EGPC, UNION FENOSA GAS & SEGAS SIGN AGREEMENTS IN RELATION TO THE DAMIETTA LNG PLANT

On 30th June 2003, at EGAS headquarters in Cairo, Egyptian Natural Gas Holding Company (EGAS), Egyptian General Petroleum Corporation (EGPC) and Union Fenosa Gas, S.A. signed a Participation Agreement by which EGAS and EGPC will become 10% each shareholders in Spanish Egyptian Gas Company (Segas), the company that owns the Damietta LNG plant. As a consequence of this agreement, Union Fenosa Gas will hold an 80% stake in Segas.
Moreover, Segas and EGAS signed a Tolling Agreement by which Segas will secure a 25 years tolling service contract for the liquefaction of about 3.2 bcm per year delivered by EGAS at the inlet of the Damietta LNG plant. As Segas entered into another tolling agreement with Union Fenosa Gas for an amount of 4.4 bcm per year, by this tolling contract, the Damietta plant has booked 100% of its liquefaction capacity for the next 25 years.

"The participation by EGAS in the ownership of Segas and the tolling agreement are significant elements of the Egyptian gas export strategy." said Mr. Mohamed Tawila, Chairman of the Board of EGAS. The advanced stage of the construction of the plant will allow Egypt to expedite the LNG export plans, enhancing Egypt’s competitive advantage".

"The today agreements represent a further important milestone in the development of the first Egyptian LNG liquefaction terminal." commented Mr. Elias Velasco, Chairman of the Board of both Union Fenosa Gas and Segas. "I am extremely proud of this achievement, which contributes to the fast and positive progress of our business in Egypt, strengthening our cooperation with EGAS and with EGPC."

Segas started the construction of a 5.0 Mt per year LNG train liquefaction plant in September 2001, presently carried out by more than 5,400 people, of which around 97% are Egyptians with a major participation of Egyptian qualified contractors. Nowadays, it is the biggest LNG train under construction in the world and its start-up is scheduled in October 2004, exporting to Spain the first Egyptian LNG cargo by the end of the year.
The total investment required by the plant is about 1.3 billion USD, implying one of the lowest unit investment cost for Greenfield LNG projects.

Union Fenosa and Eni S.p.A. entered into a Participation Agreement envisaging the acquisition of a 50% stake of Eni in Union Fenosa Gas. Following the clearance of the European Commission and of the Spanish Government, the closing of the transaction is expected during July 2003.