Amoco, Repsol form gas alliance

Amoco Corp. and Repsol SA of Spain have agreed to form a strategic alliance to supply natural gas markets in Latin America and Spain.

As a first step, the two companies have proposed adding a second train to an LNG plant being built at Point Fortin, Trinidad, by Atlantic LNG Co. (OGJ, Oct. 20, 1997, p. 52). The alliance also involves a purchase agreement by Repsol that would provide a guaranteed market for natural gas from Trinidad and Tobago and enable the country to become one of the world's top suppliers of liquefied natural gas (LNG).

Under the terms of proposal, Repsol would commit to buy almost 5 million metric tons/year of LNG from the country for 20 years, primarily for markets in Spain. This would be in addition to the LNG already contracted for delivery to Spain from the plant's first production unit, slated to start up in 1999 with capacity to produce 3 million tons/year (Repsol unit Enagas has agreed to buy 40% of the output from Train 1).

Atlantic LNG shareholders are: Amoco 34%, Repsol 20%, BG plc 26%, National Gas Co. of Trinidad and Tobago Ltd. 10%, and U.S.-based Cabot Corp. 10%.

Amoco will supply all of the gas for Train 1 of the plant and is well positioned to supply feed to any further trains, having discovered additional natural gas resources of 11 tcf in the area during the last 4 years.

The agreement

Under terms of the agreement, Repsol will have the chance to buy a 10% interest in the existing producing and exploration assets in Amoco Energy Co. of Trinidad and Tobago, with an option to increase its interest to 30% later.

In addition to the Trinidad and Tobago LNG project, Amoco and Repsol will jointly pursue new gas-fired power generation projects in Spain and other natural gas opportunities in Latin America and the Caribbean. Both companies are actively investigating opportunities in Brazil, which is set for significant natural gas growth.

Spain is a major importer of LNG and one of the fastest growing gas markets in the Atlantic Basin. Much of the country's demand growth is tied to expected new gas-fired power generation.

The firms have discussed their expansion plans with the Trindad and Tobago government. Amoco Energy Development Co. Pres. Rebecca A. McDonald said, "The LNG expansion proposal alone would bring to Trinidad and Tobago total investment of about $3 billion and at least $6 billion in tax revenue as well as significant employment opportunities over the life of the project."