London-based BG Group announced last week that its wholly-owned subsidiaries, BG LNG Services LLC and BG Gas Marketing Ltd., have completed a long-term agreement to acquire all of El Paso Merchant Energy’s capacity in the Elba Island liquefied natural gas (LNG) regasification terminal in Georgia and related LNG purchase and gas sale agreements.

The transaction was valued at $127 million (US), of which $50 million will be deferred and conditional upon gas off-take arrangements, according to the British oil and gas company.

Through a service agreement with the Elba Island terminal owner, El Paso’s Southern LNG Inc., BG LNG Services will hold firm capacity rights at the terminal for 446 MMcf/d from Jan. 1, 2004 through Dec. 1, 2023. Of this, approximately 159 MMcf/d of terminal capacity may be used to regasify LNG that Marathon Oil Co. is entitled to sell at Elba Island, BG Group noted.

The assigned agreements also include the purchase of LNG from BG and its upstream partners out of Atlantic LNG’s Trains 2 and 3 in Trinidad and Tobago, and agreements for the supply of natural gas downstream of the Elba Island terminal, BG Group said.

“The deal we have announced…represents another step forward in the development of BG’s Atlantic Basin strategy. It underscores BG’s ability to create natural gas chains and reinforces BG’s commitment to LNG developments in Trinidad and Tobago and LNG supply into the U.S. market,” said Martin Houston, BG’s executive vice president and managing director for North America, Caribbean and Global LNG.

In January 2002, BG LNG Services took 81% of the capacity at North America’s largest operating LNG import terminal in Lake Charles, LA, which currently has the capability to process and deliver 4.7 million tons of LNG annually, the company noted. Starting on Jan. 1, 2004, BG will begin receiving 100% of the capacity of the LNG facility. The Federal Energy Regulatory Commission has approved an expansion of the Lake Charles’ terminal capacity to 8.9 million tons of LNG annually. The expanded capacity is due to be in operation in early 2006.

BG, along with KeySpan, also is seeking to develop and upgrade an LNG terminal in Providence, RI. “If successful, this may be the first new import terminal to open in the U.S. for several years,” BG Group said in a press statement.

©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.