Monday, December 17, 2007
German RWE named as buyer of Excelerate Energy
17 December 2007
International Gas Report
German gas and power distributor RWE is buying 50% of Excelerate Energy, the US company that has pioneered on-board regasification technology, sources told Platts December 6.
While there have been many rumors that Excelerate has been for sale for at least two years, primarily because of its inability to secure long-term supplies, sources think there is good reason to believe that RWE would follow through on such a deal. Excelerate officials have previously denied that the company is for sale.
RWE already has a number of business relationships with Excelerate. It has a deal to take any regasified LNG delivered to Excelerate's terminal in Teesside, UK. The two companies also have an agreement to use Excelerate technology to develop terminals in Europe, including the proposed 600,000 cubic meter/hr Wilhelmshaven GasPort terminal in Wilhelmshaven, Germany, scheduled to come on line in late 2010.
RWE also has had a strong desire to enter the LNG business to grow its power and gas businesses in the increasingly deregulated European market.
In addition to its proposed projects with Excelerate, RWE has a 16.69% stake in the proposed Adria LNG terminal in Croatia that would serve central and eastern Europe and has entered into a preliminary agreement for a 10% stake in the proposed Dutch Gate terminal in Rotterdam, where RWE has committed to a long-term purchase of 3 Bcm/year of regasification capacity.
Through its partnership with Belgian shipping company Exmar, Excelerate has ownership interest in three existing onboard regasification vessels and five such vessels on order, as well as a charter interest in an existing standard LNG carrier.
In addition, Excelerate owns the Gulf Gateway terminal 116 miles offshore the US state of Louisiana that opened in 2005, the Teesside terminal that opened last year and the Northeast Gateway scheduled to open offshore Boston, Massachusetts, next month. The regasification capacity of each terminal is determined by the regasification capacity of the vessels.
The existing vessels have capacity of 400 million cubic feet/day each, with peak capacity of about 750 million cu ft/d. The vessels on order would have higher capacity. Excelerate is owned by Oklahoma billionaire oilman and financier George Kaiser.
While Excelerate has been rumored to be for sale for at least two years, talk of a sale picked up in August when Kathleen Eisbrenner left her job as CEO and president of the company to take a job in The Hague, Netherlands, as executive vice president of Shell's global LNG business.
Excelerate has had limited success buying LNG. Even for a billionaire, it is difficult to finance a long-term LNG supply contract that would cost billions of dollars. As a result, Excelerate has had to rely on buying spot cargoes occasionally or hiring out its ships to deliver cargoes owned by other companies.
Although Excelerate has reportedly made good money when it bought cargoes, many suspect that it has been losing money. When its ships are inactive, it must still pay significant operating costs for crews and maintenance.
