Orascom stops fertilizer plants, citing gas supply issues

Orascom stops fertilizer plants, citing gas supply issues

6:39 AM, 9th November 2012
Orascom stops fertilizer plants, citing gas supply issues

CAIRO, EGYPT: Orascom Construction Industries (OCI) has stopped production at three fertilizer lines after the state gas company cut off supplies from a gas field for emergency maintenance.

Egypt, a net gas exporter, has been suffering fuel shortages and electricity cuts due to growing consumption, forcing the government to divert gas contracted for export to the domestic market, said energy industry sources.

The government has been in talks with Qatar over the past few weeks to import liquefied natural gas (LNG) to cover its needs.

OCI, Egypt’s biggest listed company, said on Tuesday production at two subsidiaries had been halted but should be restored to previous levels within seven days. “EFC and EBIC, are facing low gas pressures, gas cuts this week due to maintenance at an EGAS field,” said Erika Wakid, Investment Relations Officer, OCI, replying to Reuters in an email.

Two lines, owned by OCI subsidiary Egyptian Fertilisers Co, produce about 1.3 million tonne of urea per year and a third, owned by its Egypt Basic Industries Corporation (EBIC) subsidiary, about 700,000 tonne of anhydrous ammonia. “We expect the situation to normalise in about a week’s time and will update the market as the situation progresses,” said Wakid.

The Chairman of state-owned Egyptian Natural Gas Co (GASCO) was quoted on Tuesday as saying the northern delta gas field of Borolous was undergoing emergency maintenance for 15 days and fertilizer and cement producers had been informed. GASCO is a subsidiary of the state Egyptian Natural Gas Holding Company (EGAS). “Pumping levels will return to normal after the fields’ maintenance operations end by mid-November as scheduled,” said Sherif Sousa, Chairman, GASCO, told al-Mal newspaper.

Analysts said a short-term supply cut should have minimal impact on OCI’s earnings and stock price unless such cuts became repetitive.

“The effect is on the sentiment mainly. There is a risk. We are producing (gas) below ordinary levels. In situations like this you would expect repetitive supply cuts,” said Ahmad Shams El-Din of EFG Hermes.

Beltone Financial estimated in a research note that production equal to 4 per cent of annual volume would be lost over the two-week stoppage.

©WOC News



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