Westcoast Sells NGX to Sweden's OM

Westcoast Energy exercised its option to sell its remaining 49% interest in NGX Canada (NGX), an electronic gas trading exchange, to OM Gruppen of Stockholm, Sweden. The deal is likely to lead to a significant upgrade of the Canadian trading system possibly to a continental system with multiple commodity offerings, according to its new owner.

"Through an early exercise of our right to acquire all of NGX, we can develop NGX faster," said Thomas Bendixen, head of OM Business Area Transaction in North America. "We plan to implement a new clearing structure in order to capitalize on OM's clearing expertise and widen the product range. In time, we will develop NGX from being a regional marketplace in Alberta to cover all of the North American market."

NGX (www.ngx.com), located in Calgary, currently provides electronic trading and clearing services to natural gas buyers and sellers at seven markets in Canada, including the AECO-C hub in Alberta, Empress and five eastern points: Dawn, Niagara, Parkway, Chippawa and Iroquois. Over the past six years, NGX has grown to serve 120 customers with trading activity averaging over 200 Bcf per month. The system averages more than 200 transactions a day with about 80% at Alberta Energy's AECO-C hub.

NGX President Peter Krenkel agreed with Bendixen that the transaction probably would lead to an aggressive expansion, including additional commodities and services. "OM has a much more aggressive view on expansion and growth in the business so I think you'll see NGX become more aggressive in terms of the markets and the commodities that it targets."

This deal follows Westcoast's initial sale of 51% of NGX to OM in February 2000. Westcoast said it expects an after-tax contribution to net income of $6 million from the sale. Westcoast spokesman Bob Foulkes said the exchange was not part of Westcoast's core operations of gas distribution and transmission. He denied that rapidly growing competition in energy e-commerce had anything to do with the sale.

Krenkel hopes some of OM's international success will spill over into NGX's operations. OM operates equity and fixed income exchanges in London and Stockholm. It develops technology that increases the efficiency of financial and energy markets throughout the world, e.g., the Nordic electricity exchange Nord Pool and the Finnish electricity exchange EL-EX. OM has operations in Europe, North America and Asia with offices in eleven countries.

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