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UK: Go-ahead for LNG import terminal in Wales

THE THREE companies participating in the Dragon LNG venture ? BG, Malaysia's Petronas and the Netherlands' Petroplus ? signed agreements last month to go ahead with the construction of a liquefied natural gas (LNG) import terminal at Milford Haven, Wales. Plans are for the £250m ($485m) facility, with an initial send-out capacity of 6.0bn cubic metres a year (cm/y), to become operational in the fourth quarter of 2007.

The agreements give BG 50% of Dragon LNG, with Petronas holding 30% and Petroplus ? which initiated the project ? holding 20%. BG and Petronas each have 20-year rights to throughputs of 3.0bn cm/y of gas, equivalent to about 2.2m tonnes a year (t/y) of LNG. Also last month, Dragon LNG awarded the engineering, procurement and construction (EPC) contract, valued at £185m, to a venture between the UK's Whessoe and the Netherlands' Volker Stevin. Construction is due to start at the beginning of 2005.

Still to be arranged, Petroplus says, is financing for the project ? for which Dragon LNG has retained Société Générale as financial adviser. Until finance is in place, the three shareholders will fund capital expenditures directly. Petroplus says it expects to realise a book profit of £45m-50m as a result of releasing 80% of the ownership of Dragon LNG to its partners.

The facility will be built on the site of the former Gulf refinery, bought by Petroplus in 1998 and used as a storage facility for oil products. Although the construction contract covers a regasification facility with a capacity of 6bn cm/y and two LNG tanks of 165,000 cm each, planning approval has been given for a third tank ? construction of which will allow the regasification capacity to be raised to 9bn cm/y.

The UK's first new LNG-receiving terminal will be National Grid Transco's Grain LNG facility, in the Thames estuary, which the company said last month will start up in April 2005. Initial capacity of the facility will be 4.4bn cm/y, all to be used for 20 years by BP and Algeria's Sonatrach (PE 12/03 p38). There are plans to expand the capacity to up to 14.0bn cm/y, for which users are being sought.

Also targeted for start-up in the fourth quarter of 2007 is the planned ExxonMobil-Qatar Petroleum terminal, to be constructed on the site of the former Esso refinery at Milford Haven and due to receive LNG from the Qatargas II facility. Early last month, ExxonMobil said it was hoping for a go-ahead decision for the investment by the end of the year. Capacity will be 12.0bn cm/y in the first phase, with an expansion to 20.0bn cm/y envisaged in 2009.

In November, Chicago Bridge & Iron was awarded the EPC contract for the first phase of the terminal, with a value of $0.73bn-0.75bn. The work includes regasification facilities to handle 7.8m t/y of LNG, three tanks of 155,000 cm each, an unloading system and refurbishment of the existing jetty. The contract was placed by South Hook LNG, owned by ExxonMobil and Qatar Petroleum.

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