PETRONAS, Malaysia’s national petroleum corporation, has signed a Letter of Intent (LOI) with Petroplus International NV (“Petroplus”) to acquire a 30 per cent equity in Dragon LNG, a special purpose outfit established by Petroplus to develop a proposed liquefied natural gas (LNG) terminal and related facilities in Milford Haven, Wales, United Kingdom.
Under the terms of the LOI, PETRONAS, Petroplus and BG Energy Holdings Ltd (“BG”), which is a subsidiary of BG Group, will jointly develop the terminal complex to receive, store, re-gas and deliver LNG to customers. BG last month signed a Memorandum of Understanding with Petroplus to become a partner, proposing to purchase 50 per cent equity in the project.
Under the terms of the LOI, PETRONAS intends to use up to 2.2 million tonnes per annum (MTPA) of the terminal’s throughput capacity. This represents about half of the initial planned capacity of the terminal. BG intends to use the remaining throughput capacity.
The LNG terminal project, which comprises a 308,000 cubic metre-storage capacity, deepwater jetties, a refinery and a co-generation facility, is expected to become operational in 2007.
PETRONAS’ proposed acquisition in the project will not only give it access to the UK LNG market but will enhance its overall position as a major player in the global LNG business. From its 23 MTPA-production facility in Bintulu in Sarawak, Malaysia, PETRONAS supplies about 16.5 MTPA of LNG to customers in Japan, Taiwan and Korea.
With already a strong presence in the North Asian market, PETRONAS earlier this year acquired a 35.5 per cent stake in the Egyptian LNG Project from Edison SpA of Italy. It also acquired 50 per cent equity in the West Delta Deep Marine concession in Egypt where the gas produced from the concession is being supplied to the project as well as to the Egyptian market. The other half of the equity in the concession is held within the BG Group.
The proposed investment is seen also as another step in building PETRONAS’ position in the Atlantic Basin’s LNG business and an opportunity to further enhance its relationship with BG Group. PETRONAS’ strategic advisor in this exercise is Lambert Energy Advisory Ltd.
Media Relations & Information Department