Sleeping on The Job
February 2019
As an industry with a lot of new and upcoming facilities, particularly ones that deal with imports from multiple sources, closures and temporary shutdowns are a lot thinner on the ground than other, mineral-based industries. AME expects that the prevalence of cost-recovered facilities will preserve the operational status of all plants until at least 2022.

Closure of two Australian projects, North-West Shelf and Darwin, from a depletion of gas reserves, will being averted by the development of new offshore fields at Brecknock-Torosa, and Caldita-Barossa, respectively. As such, the bulk of predicted closures are far into the future, and very few sites are currently shut down. 

There are two significant-capacity facilities that are currently under care and maintenance: one in Egypt, and another in Yemen. Egypt’s Idku-based ELNG plant resumed activity in 2017 after several years in care and maintenance, leaving the country’s SEGAS LNG terminal as the country’s only idle capacity.



Egypt: SEGAS (Damietta) LNG

Since its establishment in 2004, 60km west of Port Said in Damietta, Egypt’s SEGAS terminal struggled to develop a consistent gas supply. This was largely due to political instability and a rapidly increasing domestic demand for gas, both of which vastly reduced the country’s exports. The plant originally sourced natural gas from the Egyptian Natural Gas Company (EGAS), from the West Delta Deep Marine (WDDM) Concession Area about 140km from the LNG complex.

In 2012, this ongoing supply deficit resulted in the facility being idled and placed into care and maintenance after several troubled years of low throughput.

The project consists of a liquefaction plant capable to process 7.56bcmpa, equivalent to 6.8bcmpa of marketable natural gas with an energy efficiency of 90%.

Recent talks between operator Eni and partner Naturgy—and Egypt’s increasing production of domestic gas—are potential signs that indicate the SEGAS facility may resume production and ramp-up to full capacity as early as 2019, although AME expects that a restart would likely occur from 2020 onwards, after completion of any necessary engineering and following a 4- to 5-month cool down operation.

Other than domestic onshore fields, possible feed gas suppliers have expanded to include the offshore Zohr field, along with fields such as Aphrodite in neighboring Cyprus and various sources of feed gas from Israel.


Yemen: Yemen LNG

The 6.7Mtpa Yemen LNG facility closed after six years of export operations. Civil unrest had been disrupting supply for several years—with an explosion forcing a complete facility evacuation in 2013—and the further degradation of local security resulting in civil war finally forced an indefinite closure in 2015; YLNG evacuated most staff and said arrangements were in place to protect the Balhaf liquefaction site and export facilities, located on the Gulf of Aden in the Shabwa province.

After several months of uncertainty, during which it was initially stated that the facility would be able to continue operating, Houthi rebels took control of significant sections of norther Shabwa and fighting encroached on the facility—and the safety of its 700 workers.



As conflict continued, operators of the facility declared force majeure on contracts with all buyers, completely stopping production and evacuating most employees. A remaining security force prevented takeover of the site, and beyond two explosions which damaged sections of the county’s gas pipelines, the facility and its infrastructure remained mostly intact.

With the recent exports of oil from the country, speculations have arisen that the country may restart its LNG exports within the next few years. The presence of a newly formed pipeline security committee, comprised of local stakeholders, is a positive indicator, and pipeline repairs also took place towards the end of 2018. However, no official plans have been confirmed, and the re-opening is not included in AME’s base case scenario.

AME expects that once a re-opening is declared, there will be significant cost increases in the following months associated with start-up expenses and heightened security measures.