Deals boost Trinidad LNG expansion outlook

Aug. 9, 1999
Prospects for increasing exports of liquefied natural gas from Trinidad and Tobago continue to brighten.

Deals boost Trinidad LNG expansion outlook

Prospects for increasing exports of liquefied natural gas from Trinidad and Tobago continue to brighten.

BP Amoco plc and Repsol-YPF SA late last month signed two agreements related to a strategic alliance to supply natural gas markets in Latin America and Spain that their forerunners, Repsol SA and Amoco Corp., formed a little over a year ago (OGJ, June 8, 1998, p. 36).

The first accord calls for completing commercial arrangements to sell to Spain up to 5 billion cu m/year of LNG from the Atlantic LNG Co. of Trinidad and Tobago project, on the island of Trinidad.

In a separate agreement, Repsol-YPF and BP Amoco signed a joint cooperation agreement to develop new natural gas-fired power projects in Spain that will take some of the regasified Trinidad LNG-with the rest earmarked for industrial and residential markets.

Spanish electric utility Iberdrola is also expected to sign both agreements shortly. Repsol-YPF and BP Amoco are partners with Iberdrola EVE, the energy authority of Spain`s autonomous Basque government, in an LNG regasification and power project under development at the port of Bilbao, Spain, that also will use LNG from Trinidad and Tobago.

In yet another related development, Repsol-YPF and Enagàs, the transportation unit of Spain`s Gas Natural Group, plan to charter three new large-capacity LNG carriers-one each from shipping companies Elcano, Naviera F. Tapias, and Knutsen Oas Shipping.

The accords help pave the way for increased sales of LNG from Trinidad, once an expansion of the Atlantic project is completed. It started up commercial operations just this past spring, the first grassroots LNG export project in the Western Hemisphere in more than 30 years and the biggest single capital investment ever made in the Caribbean Basin (OGJ, Apr. 26, 1999, p. 30).

Project update

Even before the Atlantic project had loaded its first cargo of LNG, sponsors were already negotiating with the Trinidad and Tobago government to expand the $1 billion, 3 million metric ton/year, single-train plant.

Engineering is well under way on the proposed two-train expansion, which would boost total capacity by 7.8-8.1 million tons/year. The partners expect to receive final project approval and to begin construction later this year.

Once the expansion is approved by the government and the partners, Repsol-YPF and the other Spanish buyers will be able to buy 10-30% of the oil and gas reserves that BP Amoco owns in Trinidad and Tobago.

In addition to Spain and Portugal, the partners also are looking at markets for Atlantic LNG in Latin America, notably Brazil.

LNG carriers
A definitive award of the charter contract for the three LNG carriers hinges on the shipowners signing a time-charter party, granting delivery guarantees, and securing commitments to finance construction.

Delivery will be accomplished in stages beginning at yearend 2001.

Each of the three shipowners has an option to operate an additional LNG carrier under the contract.