Sonatrach/BP team corners UK LNG market

31 October 2003
A joint venture of the UK's BPand state-owned Sonatrach has been granted the long-term rights to supply liquefied natural gas (LNG) to the UK market from 2005 through an agreement with UK energy delivery company National Grid Transco (NGT). The 50:50 partnership will bring some 500 million cubic feet a day of LNG to the market, representing about 5 per cent of current UK demand (Oil & Gas, MEED Special Report, 11:7:03, pages 33-34).

The gas will be imported into the Isle of Grain facility, east of London, which is owned and operated by NGT. The terminal is being converted into a regassification plant and is scheduled for commissioning in 2005. It will be capable of processing 3 million tonnes a year (t/y). The agreement with NGT grants import rights to BP and Sonatrach for 20 years.

BP will source its share of the LNG from equity production and offtake agreements in various parts of the world, including Oman, Egypt and Abu Dhabi. Sonatrach's part of the supply will come from domestic production. BP and Sonatrach already work together on a number of projects in Algeria, including the In Salah and In Amenas gas developments.

'This is a very attractive agreement which will allow us to take advantage of the rapidly growing UK LNG market, some three years earlier than if we were to build a greenfield terminal,' says a BP spokesman. 'The Isle of Grain facility is also located close to London, where energy demand is at its highest, and we estimate that if necessary the terminal's capacity could be increased to one-and-a-half times its current size.'

The BP/Sonatrach agreement is the second major project that will see the UK importing LNG from the Middle East. Qatar Liquefied Gas Company II (Qatargas II), a 70:30 joint venture between Qatar Petroleumand the US' ExxonMobil Corporation, has recently been granted first-stage planning permission for an LNG import terminal at Milford Haven, in west Wales, with capacity of 15 million t/y (Qatar, MEED Special Report, 17:10:03, pages 42-44).

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