Coronavirus thwarts Naturgy's departure from Egypt

After almost a decade of litigation in the arbitration courts, the coronavirus has thwarted Naturgy's departure from Egypt, the company itself informed the CNMV (National Stock Market Commission) on Thursday. The agreement reached by the Catalan energy company and the Italian ENI to liquidate the joint venture UFG (Unión Fenosa Gas) through which they built a liquefaction plant in 2005 in the Egyptian town of Damietta has been interrupted due to the coronavirus crisis. The facility, 80% owned by the Spanish company and 20% by the transalpine company, had been inactive since 2012, following the Arab Spring riots.  

Now, the legal battle continues, despite the agreement reached at the end of February with the Egyptian authorities to terminate the project. The settlement involved Naturgy's departure from the country in exchange for $600 million in cash and most of UFG's assets outside Egypt. "As usual, this agreement was subject to certain conditions and dates that have not been met to date, so it has been suspended," the company detailed in the relevant fact sent to the CNMV.  

The energy company has indicated that, despite the circumstances, it is open to reaching new agreements to resolve the disputes affecting UFG. The $2 billion award in favor of UFG issued by the ICSID, an arbitration tribunal to resolve investment disputes at the international level, on August 31, 2018 is still in the process of being implemented, according to Naturgy.  "To date, the ICSID resolution has been homologated by the United Kingdom High Court and disclosure orders have been granted by different American courts," Naturgy stated in the document sent to the CNMV.  

The end of the agreement will not have an impact on Natugy's shareholder remuneration policy, according to the company, nor will it have consequences "on its liquidity position", the company has assured. The agreement values UFG, which is 50% owned by Natugy and ENI, at $1.5 billion, of which $1.2 billion corresponds to its Egyptian assets and the remaining $300 million to its assets outside the country. 

The plant ceased to operate in 2012 because the Egyptian state-owned company stopped supplying gas on the grounds of an alleged state of emergency arising from the Arab Spring. At that time, Naturgy began a legal battle on several fronts, including a lawsuit against EGAS before the court in Cairo and another against the state of Egypt before the ICSID because its public company did not pay what was agreed by both parties. All the rulings have been in favour of the Spanish company. The international tribunal forced Egypt to pay 1.5 billion to Naturgy "for an unfair treatment", but the company chose to reach an agreement to close a dispute that has lasted almost 10 years.