Egypt considers reducing natural gas exports - paper

CAIRO, Nov 11 (Reuters) - Egypt is considering reducing exports of natural gas due to a rise in domestic consumption in the most populous Arab country, an Egyptian newspaper reported on Wednesday.

Egypt's al-Masry al-Youm daily said Petroleum Minister Sameh Fahmy was in consultations to reduce gas exports and was reviewing contracts with foreign firms.

It quoted an unnamed source as saying the ministry wanted to determine the minimum amount it was required to export.

A ministry official told Reuters that Egypt would respect its contracts and said the newspaper report did not reflect Egypt's official position. He would not comment further.

"We view this news, if correct, as positive and significant for the local market, especially for the industrial sector, which has been consuming more energy," Egypt's Beltone Financial said a research note commenting on the newspaper report.

"According to our understanding, the increase in local demand for energy has placed increasing pressure on production capacity, in light of the rising costs, stipulating either an increase in the costs of production to increase available gas, or to reduce exports," Beltone added.

Egypt's state-owned Egyptian Natural Gas Holding Company (EGAS) said last month that plans for a second liquefied natural gas train at Damietta had been postponed until enough gas reserves were found.

Britain's BP (BP.L) and Italy's Eni (ENI.MI) had proposed a second LNG train at Damietta with a capacity of around 2 billion cubic metres per year.

EGAS, which monitors development of the gas industry in Egypt, said the gas companies had found 2 trillion cubic feet of gas, half of what is needed for the train.