Tuesday, December 18, 2007
Green light for Dutch Gate LNG terminal; Eemshaven also advances
18 December 2007
European Spot Gas Markets
Gasunie and Royal Vopak have taken a Final Investment Decision (FID) to proceed with the EUR 800 million Gate LNG import terminal in the Dutch port of Rotterdam. The pair have been joined by Danish energy company Dong Energy, the Netherlands’ Essent Trading and Austria’s OMV, which have each acquired a minority equity stake of 5% in the facility.
At the same time, Essent, Gasunie and Vopak announced they have joined up to promote the Eemshaven LNG import terminal, also in the Netherlands. Not content with just taking a 5% to possibly 7.5% stake in Gate, Essent has also taken over ConocoPhillips’ share of the Eemshaven proposal, and convinced Gasunie and Vopak to each take a 25% stake, while Essent keeps a 50% share.
The Gate terminal will be built with send-out capacity of 9 billion cubic metres/year (Gm3/y) of natural gas, equivalent to 6.4 million tonnes per annum of LNG. But none of the partners has an LNG Sale and Purchase Agreement or equity LNG, so it remains to be seen where supplies will come from. At a recent LNG conference in Rome, delegates were warned that few European terminals were unlikely to run at higher than 30% capacity for the foreseeable future, making the economics of investment in terminals harder to justify.
Dong, EconGas (a consortium of Austrian gas buyers, including OMV) and Essent were also named as the first customers to have signed long-term throughput agreements with the Gate terminal. Each has committed to an annual throughput of 3 Gm3/y.
A few weeks ago, Piet Kager, business development manager at Gasunie, admitted Gate’s potential long-term capacity holders had experienced difficulties in signing long-term LNG supply contracts, and that had delayed the FID being taken on Gate.
Three previous Heads of Agreement (HOA) for capacity at the terminal have fallen by the wayside. Shell was to take 4 Gm3/y of throughput capacity, while RWE and France’s EDF had signed HOAs for 3 Gm3/y each. Both RWE and EDF had said they would take a 10% equity stake in the terminal, but none of those agreements was referred to in Gasunie and Vopak’s announcements.
An EDF source confirmed the company had decided not to progress its HOA, due to a general lack of LNG supply, and because the company is progressing its own, 100%-owned facility at Dunkirk. An RWE spokesman confirmed that RWE “would not join this project at this time”. He said the company – which recently announced talks to take a stake in US LNG shipper Excelerate Energy – was checking the economic rationale behind investments in European import terminals.
However, the companies involved are bullish. John Paul Broeders, chairman of Vopak, and Marcel Kramer, chairman of Gasunie, said in a joint statement: “The fact that our launching customers – Dong Energy, EconGas and Essent – have signed throughput agreements with us proves that the anticipated interest in the market for this state-of-the-art LNG terminal is there.”
Meanwhile, Essent’s director of business development, Gerard Uytdewilligen, said Gasunie and Vopak were “natural partners” for Essent in the development of the LNG terminal at Eemshaven, due to their “knowledge, power and market position”.
“The combination of Eemshaven and Gate helps Essent give a strong signal as to how seriously we take LNG as an alternative and supplement to natural gas. The producers of LNG will certainly understand this,” he added. The LNG terminal at Eemshaven is expected to have annual capacity of 12 Gm3. HW
