BG inks purchase agreement for ELNG Train 2 output

July 2, 2003
BG Gas Marketing agreed to the principal terms by Egyptian LNG Train 2 partners for purchase of the entire 3.6 million tonne/year output of liquefied natural gas from the proposed Train 2 unit in Egypt.

By OGJ editors

HOUSTON, July 2 -- BG Gas Marketing Ltd., a subsidiary of BG Group plc, agreed to the principal terms by Egyptian LNG (ELNG) Train 2 partners for purchase of the entire 3.6 million tonne/year output of liquefied natural gas from the proposed Train 2 unit in Egypt.

In turn, ELNG Train 2 partners awarded a contract and a notice to proceed to Bechtel Corp. for engineering, procurement, and construction of the $550 million Train 2 facilities, which are scheduled to start commercial operations in 2006.

LNG to be purchased by BG Gas Marketing is to be supplied to BG LNG Services at the Lake Charles LNG import terminal in Louisiana. A second agreement stipulates that LNG from Train 2 also will be supplied to a LNG import terminal being developed by BG Group and Ente Nazionale Energia Elettrica (ENEL) SPA at Brindisi, Italy, beginning approximately 1 year after Train 2 initiates commercial operations.

BG Group's Atlantic basin LNG strategy is "based on four cornerstone assets," said BG CEO Frank Chapman. "We now have our interest in Atlantic LNG's three operating trains of LNG in Trinidad, and we have also secured access to the Lake Charles LNG receiving terminal, the largest such facility in the US. Together, these assets give BG Group production and market access in the Western Atlantic."

The latest deal represents "a major advance in our LNG business in the Eastern Atlantic and reinforces our position at Lake Charles," he said. The plan to split production from ELNG Train 2 between the Lake Charles and Brindisi terminals "gives us material production in the Eastern Atlantic, expands the long-term supply portfolio for Lake Charles, and develops our access to the European market for LNG," Chapman said.

"These agreements will advance Egyptian LNG to the next stage of its development and open up new export markets," said Martin Houston, BG Group executive vice-president. "Egypt is rapidly emerging as a global LNG player and is set to become, in 2006, the world's seventh largest LNG exporter and the fourth largest in the Atlantic Basin. The fast track development and ability to secure gas markets is a major achievement for BG Group, its partners and the Government of Egypt."

The Sapphire field in the BG-operated West Delta Deep Marine concession, offshore the Nile Delta, will supply gas for Train 2. A development contract for Sapphire field is expected this month.

The $1.35 billion ELNG Train 1 plant and common facilities are under construction at Idku, Egypt. An agreement was signed last October 2002 for sale of the entire 3.6 million tonne/year output of the first train to Gaz de France. Train 1 is scheduled to start production in the second half of 2005.

ELNG partners include BG 35.5%, Petroliam Nasional Bhd (Petronas) 35.5%, Egyptian General Petroleum Corp. 12%, Egyptian Natural Gas Holding Co. 12%; and Gaz de France, 5%.