Egypt Buys French Gowind Class Warship And French-owned Gas Field…….Oil and War Do Mix

Posted: November 12, 2014 in Econ 101, War Is The New Economy

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Egypt Becomes 2nd Customer for Gowind Corvettes

In March 2014, France’s La Tribune reported that Egypt was about to become DCNS’ 2nd customer for their new Gowind Combat Corvette, with plans to order 4 ships in a EUR 1 billion (about $1.38 billion) deal. What’s interesting is that despite the country’s current economic woes, naval modernization at all levels remains an important commitment. By June 2014, Egypt had signed a deal.

Egypt’s Navy

Egypt has been investing in its Navy in recent years, as the Fast Attack Craft they had in service began to age out. Despite the recent revolution and current financial crisis, they seem determined to continue modernizing at all levels.

Their new 500t Ambassador Mk.III Ezzat Class began entering service in November 2013, to replace an aging FAC/patrol boat fleet. They come equipped with RGM-84 Harpoon Block II medium strike missiles, plus short-range RAM missiles for air defense. Deliveries continue from VT Halter in Mississippi.

At the higher end, the Egyptian Navy received 2 Knox Class frigates in 1994, and 4 FFG-7 Perry Class frigates over 1996-1998, but those ships were all built between 1973-1982. Their most recent ships by build date are actually 2 Chinese Jianghu Class 1,900t light frigates, which were built in 1984-1985.

This higher-end zone is where Egypt’s 102m Gowind Combat 2500 corvettes will serve, and Egypt’s long-standing defense relationship with France helped DCNS beat Damen Schelde (Sigma Class) and ThyssenKrupp Marine (MEKO 100/200). the Gowinds will use VL-MICA missiles for air defense, and fire a 76/62 gun, MU90 torpedoes (likely), and MM40 Exocet anti-ship and land strike missiles. The powerplant will be optimized for quiet, to improve both minehunting and sub-hunting work.

On the submarine front, persistent reports suggest that Germany and Egypt have cleared all barriers to a reported 2011 purchase of 2 modern U209 submarines from Germany’s TKMS, as a replacement for the Russian Romeo Class boats delivered to Egypt in 1983-1984. What still missing is confirmation.

Contracts & Key Events


Nov 8/14: Weapons. DCNS orders 4 of Oto Melara’s 76/62 Super Rapid Multi Feeding (SRMF) guns to equip its 4 new Gowind 2500 corvettes. The SRMF variant enables the automatic selection of the most appropriate ammunition in the gun magazine. Sources: Oto Melara, “76/62 Super Rapid – Naval Gun Mount” | IHS Jane’s Navy International, “DCNS contracts Oto Melara to supply 76/62 SRMF guns for Egypt’s Gowinds”.

Oct 27-31/14: DCNS finally confirms the existence of Gowind 2500 contracts with Malaysia and Egypt, but it’s just a short Twitter post from EuroNaval. Defense-Aerospace has a more in-depth report, which values the 2 deals at EUR 1.5 billion to DCNS for 10 ships. It adds that the Egyptian Gowinds will be just 102m, with 2 x 20-cylinder MTU diesels and low-signature electric motors.

The 1st French-built ship is due to be launched in 2017, while the Egyptian shipyard has been undergoing upgrades since July 2014 to get ready for the next 3 ships and possible 2 options. Note that equipping the ships is a separate issue, with expected contracts of about EUR 400 million for MBDA’s MICA air defense and MM40 Exocet anti-ship missiles, and EUR 100-200 million to DCNS for MU90 lightweight torpedoes. Sources: DCNS, Twitter post | Defense-Aerospace, “DCNS Confirms Sale of 10 Gowind Corvettes, Expects More”.

June 3/14: Contract. La Tribune reports that Egypt has signed a EUR 1 billion contract for 4 Gowind corvettes, which will be equipped with VL-MICA air defense missiles and Exocet MM40 anti-ship and land strike missiles. Marshal (now President) Abdel Fattah al-Sisi was reportedly the motivating force behind the deal. The 1st ship will be built in France, with the remaining 3 to be built in Alexandria under technology transfer, and 2 additional options.

It’s tricky to say whether Egypt is DCNS 1st or 2nd Gowind customer. Malaysia’s SPGV-LCS will be a similar Gowind corvette, and ancillary contracts have been signed, but the main contract appears to be pending while Malaysia prepares a local shipbuilding industry to execute it. It ends up technically coming into effect in July 2014. Egypt’s contract, in contrast, appears to be a full buy. Meanwhile, Uruguay is reportedly considering Gowind patrol craft like France’s L’Adroit. Sources: La Tribune, “Armement : DCNS décroche un contrat de 1 milliard d’euros en Egypte” | Defense News, “DCNS Cuts Deal With Egypt for 4 Gowind Ships”.

Contract: 4 corvettes

March 5/14: La Tribune reports an imminent deal for 4 Gowind corvettes, at a cost of EUR 1 billion, with 3 of the 4 ships to be built in Egypt. They also point out a recent raft of Egyptian military buys, from clearance for the U209 deal to agreements with Russia that are reportedly worth over $2 billion.

The Malaysian “LCS” ships have grown to become 3,000t frigates, but reports place Egypt’s ships at the standard (2,200t) size, with the standard armament of Exocet anti-ship missiles and VL-MICA short-medium range air defense missiles. With the conversion of Egypt’s second-hand Tiger Class FACs from Exocets to Harpoon Block II (q.v. Dec 20/12) missiles, the new Gowinds would become the Egyptian Navy’s sole sea-going platform for MBDA’s Exocet anti-ship missile, which is also used in some coastal defense batteries. Sources: La Tribune, “L’Egypte sur le point de s’offrir quatre Gowind de DCNS pour 1 milliard d’euros” | Al Arabiya, “Report: Egypt to purchase four warships from France”.



Egypt Kuwait Holding announces gas field purchase north of Suez

Mohamed Ayyad  /   November 11, 2014

Prime minister says government is working to remove obstacles for investors and create safe environment for profits

The Egypt Kuwait Holding (EKH) company announced the purchase of a gas field from a French company north of Suez, according to a cabinet statement on Sunday evening.

Cabinet Spokesperson Hossam Al-Qaweesh said that during a meeting with Prime Minister Ibrahim Mehleb on Sunday, the company confirmed it increase investments during the coming phase and expanding into new areas. The company also added that it has plans to implement projects to produce electricity from new and renewable energy.

EKH management did not disclose details about the field it purchased or its value, but said it will work to increase the amount of gas produced from that field.

Mehleb, according to the cabinet statement, said: “The government is making every effort to remove all obstacles facing investors and is aware of their right to a favourable investment climate that will bring them profits.”

“President Abdel Fattah Al-Sisi is always keen to encourage investment and the private sector, what with its large role in providing employment opportunities for the youth and reducing the phenomenon of unemployment,” he added.

Last month, EKH said that Mehleb intervened in a problem faced by them and 21 other IPO companies [KD1] for which issuance of approvals to increase capital were delayed for four months. The company said that “the prime minister solved the problem in four hours”.

EKH’s shares have increased following its capital increase worth $34.1m.

EKH Investor Relations Director Haitham Abdel Moneim said in an interview recently that the energy sector plays a key role in the company’s growth plan. The company said it plans to spend about $500m in new investments during 2015 so that the company’s total investment portfolio increases to $2.5bn.

Abdel Moneim said that the new investments will focus on expanding stakes in oil companies or oil wells in Egypt and doubling production of the Al-Sabriya plant, which is owned by EKH. There are also plans to expand into the field of natural gas delivery for homes and commercial purposes.

The energy sector contributes to between 40%-45% of company profits and revenues, he added.

Abdel Moneim pointed out that through one of its subsidiaries, EKH owns around 5% of the largest oil field in South Sudan and East Africa. He added that the company is working to acquire stakes in wells that are already producing oil in Egypt.

EKH has approximately 20 subsidiary companies operating in the fields of oil, gas, insurance, fertilisers, telecommunications, construction, financial investments, amongst other areas.



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