Statement re Grain LNG
National Grid Transco PLC
31 March 2005
31 March 2005
National Grid Transco announces £355 million expansion of Isle of Grain LNG
importation terminal
National Grid Transco plc (NGT) today announces a new £355 million investment to
triple the capacity of its Isle of Grain Liquefied Natural Gas (LNG) importation
terminal in Kent, owned and operated by its subsidiary, Grain LNG Limited.
This second phase of development will increase the facility's capacity to import
and process LNG from 3.3 million tonnes per year to 9.8 million tonnes per year,
representing around 12 per cent of the UK's annual gas demand, and is expected
to commence operations in late 2008.
The additional investment in Grain LNG is underpinned by 20 year contracts
signed with Centrica, Gaz de France (GdF) and Sonatrach for the additional
capacity. It also includes a lump-sum turnkey contract with CB&I John Brown to
construct three new LNG storage tanks and associated works required for this
expansion. This follows on from the first phase of development at Grain, where
3.3 million tonnes capacity of LNG per year was acquired in 2003 by BP/Sonatrach
under a 20 year agreement.
Commenting, Edward Astle, Group Director of NGT's Non-Regulated businesses,
said:
'As Britain moves progressively from being an exporter to a significant importer
of natural gas, it is vital that the infrastructure is in place to meet the
nation's gas requirements. NGT has been a leader in enabling the import of
liquefied natural gas. This expansion of our Isle of Grain facility will bring
our total investment in liquefied natural gas infrastructure to some
£500 million. It will triple Grain's capacity and help ensure liquefied natural
gas can play its full part in meeting Britain's future energy needs, as well as
diversifying the source of gas supplies for the country.'
The Isle of Grain facility has been associated with LNG storage capacity since
the early 1980s. In 2003 NGT announced an investment of £130 million in the
first phase of converting the site into a LNG importation facility, to enable
LNG tankers to berth, unload and store LNG, prior to its regasification and
nomination of gas for delivery into the UK's National Transmission System. It
will come on stream this spring, representing around 4 per cent of the UK's
annual gas demand.
Cautionary statement
This announcement contains certain statements that are neither reported
financial results nor other historical information. These statements are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Because these forward-looking statements are subject to assumptions,
risks and uncertainties, actual future results may differ materially from those
expressed in or implied by such statements. Many of these assumptions, risks and
uncertainties relate to factors that are beyond National Grid Transco's ability
to control or estimate precisely, such as delays in obtaining or adverse
conditions contained in regulatory approvals, competition and industry
restructuring, changes in economic conditions, currency fluctuations, changes in
interest and tax rates, changes in energy market prices, changes in historical
weather patterns, changes in laws, regulations or regulatory policies,
developments in legal or public policy doctrines, the impact of changes to
accounting standards, technological developments, the failure to retain key
management, the availability of new acquisition opportunities or the timing and
success of future acquisition opportunities. Other factors that could cause
actual results to differ materially from those described in this announcement
include the ability to continue to integrate the US and UK businesses acquired
by or merged with the Group, the failure for any reason to achieve reductions in
costs or to achieve operational efficiencies, unseasonable weather impacting on
demand for electricity and gas, the behaviour of UK electricity market
participants on system balancing, the timing of amendments in prices to shippers
in the UK gas market, the performance of National Grid Transco's pension schemes
and the regulatory treatment of pension costs, the impact of the proposed
disposal by National Grid Transco of four of its UK gas distribution networks
and any adverse consequences arising from outages on or otherwise affecting
energy networks owned and/or operated by National Grid Transco.
For a more detailed description of these assumptions, risks and uncertainties,
together with any other risk factors, please see National Grid Transco's filings
with the United States Securities and Exchange Commission (and in particular the
'Risk Factors' and 'Operating and Financial Review' sections filed with its most
recent annual report on Form 20F). Recipients are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this announcement. National Grid Transco does not undertake any obligation to
release publicly any revisions to these forward-looking statements to reflect
events or circumstances after the date of this announcement.
Contacts
National Grid Transco
Investors
Alexandra Lewis +44 (0)20 7004 3170 +44 (0)7768 554879(m)
David Campbell +44 (0)20 7004 3171 +44 (0)7799 131783(m)
Richard Smith +44 (0)20 7004 3172 +44 (0)7747 006321(m)
Bob Seega (US) +1 508 389 2598
Media
Clive Hawkins +44 (0) 20 7004 3147 +44 (0) 7836 357173(m)
Christine Riches +44 (0) 13067 48596 +44 (0) 7785 508661(m)
Chris Mostyn +44 (0) 1926 655275 +44 (0) 7879 668025(m)
Citigate Dewe Rogerson +44 (0)20 7638 9571
Anthony Carlisle +44 (0)7973 611888(m)
Photographs of the Isle of Grain facility are available at www.newscast.co.uk
Notes to Editors
1. Britain's Gas Import Demand
Britain's annual gas demand is projected to increase by at least 15 per cent
over the next ten years. As production from North Sea gas fields declines,
dependence on gas imports is forecast to approach 46 per cent by 2010.
Government and industry forecasts recognise the need to secure long-term gas
imports. LNG imports will also add to the diversity of gas supply and enable gas
to be released into the system quickly to meet demand requirements.
LNG is natural gas liquefied by refrigeration to a temperature of -160C. This
process reduces its volume to 1/600th of that at normal temperature, enabling
bulk and economic transportation by tanker.
2. Isle of Grain Terminal
The Isle of Grain LNG site was established in the early 1980s as an LNG storage
facility, holding approximately 200,000 cubic metres.
In 2003, planning permission was granted by Medway Council to convert the site
into an LNG importation terminal. This resulted in the construction of a
deep-water jetty on the River Medway estuary, to enable purpose built LNG ships,
with LNG capacities of up to 205,000 cubic metres to dock. It also required the
installation of new boil-off gas compressors, high efficiency vaporisers and a
4.5km cryogenic pipeline to transport LNG from the ships to the tanks, as well
as converting the four existing LNG storage tanks for importation from LNG
ships.
The first contract for use of Grain LNG's phase one capacity was signed in
October 2003 with BP/Sonatrach, for the import of up to 3.3 million tonnes of
LNG per annum over 20 years.
Planning permission was granted by Medway Council for the phase two development
in September 2004. It will require the construction of three additional total
containment storage tanks of 190,000 cubic metres capacity each, bringing the
total storage capacity of the terminal to approximately 770,000 cubic metres, as
well as associated vaporisation equipment and tie-ins to the existing LNG
unloading and gas export systems.
3. Grain LNG Capacity
Phase one development of the Grain LNG facility equates to an additional 12
million cubic metres of gas entering the National Transmission System every day,
or around 4.4 billion cubic metres per annum, representing around 4 per cent of
the UK's current annual gas demand.
Phase two development equates to an additional 23.5 million cubic metres of gas
entering the National Transmission System every day, or around 8.6 billion cubic
metres per annum.
Phase one and phase two developments together equate to an additional 35.5
million cubic metres of gas entering the National Transmission System every day,
or around 13 billion cubic metres per annum, representing around 12 per cent of
the UK's current annual gas demand.
This information is provided by RNS
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