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Irving Oil, Repsol Sign Pact on Canaport LNG Terminal

June 13, 2005
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Canada's Irving Oil and Spain's Repsol, a major player in the global liquefied natural gas (LNG) business, have signed definitive partnership agreements on development of the 1 Bcf/d Canaport LNG terminal in St. John, NB, which would be connected to Irving Oil's refinery and the eastern Canadian pipeline grid. The terminal is expected to be operational, delivering regasified LNG into the marketplace, in 2008.

The agreements form a new company, Canaport LNG, which will construct, own and operate the terminal. Repsol will be responsible for providing all of the LNG and will hold the capacity of the terminal. Irving Oil will market the regasified LNG in Atlantic Canada, and Repsol will market the regasified LNG elsewhere in Canada and in the United States.

The companies have nearly completed front-end engineering design for the terminal, and plan to request proposals for engineering, procurement and construction (EPC) contracts in July.

Repsol considers the terminal a key element of its 2005-2009 strategic plan, which was announced last month. "The Atlantic Basin LNG projects will constitute for Repsol YPF one of its principal strategic businesses and has great potential in the strategic plan following the recently announced joint venture with Gas Natural SDG," the company said.

Repsol and Gas Natural announced an agreement in April to participate jointly in future integrated LNG projects, including the areas of exploration, production and liquefaction of natural gas reserves, as well as new market access. The agreement also includes the creation of an LNG trading, marketing and transportation company, which will be the third largest LNG company in the world in terms of sales volume. The joint venture will have a fleet of 12 LNG cargo ships.

Repsol's LNG business includes the Gassi Touil project in Algeria, which is expected to start in 2009 with a second train three years later; the Persian LNG project in Iran, which is expected to come online in 2010; a portion of LNG Train 4 in Trinidad and Tobago; and a possible LNG terminal in Venezuela.

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