NGI Archives | NGI All News Access
Repsol-Shell LNG Deal Excludes Canaport Terminal
Royal Dutch Shell plc is acquiring part of Repsol SA’s liquefied natural gas (LNG) portfolio outside North America, in particular adding LNG capacity in the western Atlantic Basin from Atlantic LNG in Trinidad & Tobago, and in the East Pacific from Peru LNG. Not being sold is Repsol’s troubled Canaport LNG regasification terminal in Saint John, NB.
Shell is paying $4.4 billion cash and will assume and consolidate liabilities, mainly for leases for LNG ship charters of $1.8 billion, subject to pre-closing adjustments. It also is assuming debt of $500 million, bringing total consideration to $6.7 billion. The agreement includes the assets in Trinidad & Tobago (Atlantic LNG), Peru LNG and Bahia de Bizkaia Electricidad as well as LNG sales contracts and time charters.
“Shell’s world-wide LNG supply position and customer base means we are uniquely positioned to add value to Repsol’s LNG portfolio, including through Shell’s trading capabilities,” said CEO Peter Voser. “By optimizing the combined portfolios we will increase our ability to bring LNG to areas that need it the most, adding value for Shell, our partners and our customers.”
The additions will complement Shell’s existing LNG capacity in Africa, Asia, Australia, the Middle East and Russia, the buyer said. The acquisition should add some 7.2 million tonnes per annum (mtpa) of LNG volumes through long-term offtake agreements, including some 4 mtpa of equity LNG plant capacity, Shell said.
The company said it expects to add value to the LNG portfolio by optimizing the new LNG flows in its world-wide customer base. Subject to successful completion, the new portfolio is expected to immediately provide additional cash flow to Shell, with limited ongoing capital expenditure requirements, the major said.
Spain’s Repsol and Shell have also signed an LNG supply agreement by the latter to the Canaport terminal of about 1 million tonnes over a 10-year period. The North American facility is not included in the sale as low gas prices in the U.S. market do not allow the asset’s medium- and long-term potential to be adequately valued, Repsol said.
“Repsol will analyze all available operational, financial and strategic options for this asset” and will adjust the book value of Canaport with a net provision of $1.3 billion, which will be recognized at the time of the transaction’s closing, the company said.
Canaport has seen its fortunes falter with the rise of the shale era and cheap natural gas in North America (see Daily GPI, July 25, 2012), which has made LNG imports less attractive.
Most of the LNG shipped to Canaport had come from Trinidad and Tobago, and Qatar. Repsol has the ability to bring regasified LNG from Canaport into the United States via pipeline. Canaport officially opened in September 2009 (see Daily GPI, Sept. 28, 2009) after receiving its first cargo several months earlier (see Daily GPI, June 19, 2009). The following year Repsol signed a multi-year LNG supply deal with Qatargas for delivery to Canaport (see Daily GPI, Dec. 27, 2010; Oct. 8, 2010).
Repsol said the sale process attracted “significant interest and led to more than a dozen bids from the world’s most significant liquefied natural gas operators.” The deal strengthens Repsol’s balance, advancing its goal of reinforcing credit ratings. It reduces Repsol’s net debt by more than half to 2.2 billion euros, excluding Gas Natural Fenosa.
“With this transaction, Repsol has in a year divested assets for more than 5 billion euros, surpassing the objectives outlined in the 2012-2016 Strategic Plan to divest between 4 and 4.5 billion euros in the period,” the company said.
The transaction, which has an effective date of Oct. 1, is expected to close in the second half of 2013 or early 2014, subject to regulatory approvals and other conditions.
Â©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |