The discovery of an intact sarcophagus dating back 3,500 years to the 18th Dynasty of Ancient Egypt in the excavations of the necropolis of Dra Abu el-Naga close to Luxor has been the highlight of Spanish utility Unión Fenosa Gas’s activities in the North African country over the past year. Work at the gas liquefaction plant at Damietta, which is jointly controlled with Italy’s ENI, has been halted and that is the reason the two partners have decided to take legal action against the Egyptian government.
The Unión Fenosa/ENI joint venture last week filed an arbitration suit with the International Centre for the Settlement of Investment Disputes (ICSID), which operates under the auspices of the World Bank. This is the second such suit filed by a Spanish company against the Egyptian government since the renewed outbreak of the social and political crisis in the country. Cement company Cementos la Unión y Áridos Játiva filed a complaint last year.
Unión Fenosa has hired the Houston, Texas-based law firm King & Spalding, which specializes in energy issues and has a presence in the Middle East, to represent it.
The freezing of the Damietta plant led Unión Fenosa’s parent Gas Natural Fenosa to take a charge of 70 million euros against its 2013 earnings. The utility wrote down the value of its holdings at the Damietta plant to zero.
“We continue with the problem of the temporary halt (to activity at the Damietta plant),” Gas Natural’s chief executive officer, Rafael Villaseca, said at a presentation of the company’s 2013 earnings. “We have yet to reach a satisfactory agreement with the Egyptian authorities on how and when to resolve this problem. We are confident that when the political situation in Egypt stabilizes, something that we expect will happen quite soon, we can go into the details over what the final agreement will be.”