SHELL ALGERIA LNG DEAL TO RESTART COVE POINT

The Cove Point, Md., liquefied natural gas import terminal will be reactivated after an 11 year shutdown to handle a long term LNG contract between Royal Dutch/Shell Group and Algeria. Shell International Gas Trading Co. agreed to buy 81 bcf/year from Sonatrading Amsterdam BY, a subsidiary of Algeria's state oil company Sonatrach. The deal is subject to U.S. regulatory approval. In the U.S., the gas will be sold to Cove Point Trading Co., a proposed joint marketing venture of units of

Feb. 25, 1991

2 min read

The Cove Point, Md., liquefied natural gas import terminal will be reactivated after an 11 year shutdown to handle a long term LNG contract between Royal Dutch/Shell Group and Algeria.

Shell International Gas Trading Co. agreed to buy 81 bcf/year from Sonatrading Amsterdam BY, a subsidiary of Algeria's state oil company Sonatrach. The deal is subject to U.S. regulatory approval. In the U.S., the gas will be sold to Cove Point Trading Co., a proposed joint marketing venture of units of Shell Oil Co. and Columbia Gas System Inc.

Deliveries are expected to begin between mid-1992 and mid-1993. After an initial 18 month buildup, there will be a 15 year delivery plateau.

Shell said its gas subsidiary and Sonatrach had agreed to supply and take the full annual contract quantity but there were no specific take or pay provisions.

Prices, it said, were "market reflective" and based on an equitable sharing of proceeds from sale of the regasified LNG in the U.S. Northeast. Confirmation of the deal will lead to Shell Oil taking a 50% stake in Columbia LNG, which owns the Cove Point terminal.

Shell International Gas Trading will deliver the LNG in the existing LNG tankers Arzew and Southern which had previously been the subject of a legal dispute (OGJ, Oct. 8, 1990, p. 32).

The vessels passed into the ownership of the U.S. Maritime Administration after they were built but were never used. At the end of 1988 the Argent Group took an option to buy the two vessels and time charter them to Shell Bermuda (Overseas) Ltd.

But the options agreements were disputed and subjected to lawsuits in the U.S. Shell said a settlement has been reached and title to the vessels has passed to the Argent group.

The time charters have been activated, but the vessels are still in layup awaiting refurbishment before moving first cargoes to Cove Point.