Petrofac, the international oil & gas facilities service provider, announces that it has acquired a 20% interest in Gateway Storage Company Limited (Gateway), to progress and develop the Gateway Gas Storage project in the East Irish Sea. The cash consideration could be up to £33 million over time, funded from cash resources. This is split into a fixed upfront payment and additional contingent payments subject to key project development milestones being achieved, including the outcome of a further successful equity sales process.
Petrofac will join Gateway as the technical project operator, jointly responsible for developing the project, and will be represented on Gateway’s Board. The front end engineering and design (FEED) phase of the project is nearing completion and the focus is now turning to project execution and finalisation of the consortium of storage capacity holders and investors to develop the project towards the final investment decision in 2011.
The Gateway Storage project, which would add nearly 30% to the current gas storage capacity in the UK market, secured the first Gas Storage Licence from the UK Department of Energy & Climate Change in February 2010 after receiving the main planning and environmental consents and permits in late 2008. Gateway is targeting 2016 for the commencement of storage services to the UK energy markets.
Rob Jewkes, managing director, Petrofac Energy Developments commented: “Petrofac is pleased to join with Gateway to progress this strategically important and well advanced storage project. With FEED activities largely complete, we are entering the project at this stage to bring confidence to the investor group that execution and delivery objectives for the complete facilities can be met, and will utilise the full capabilities of our group to optimise the facility design and deliver the project.”
George Grant, chairman of Gateway Storage Company Limited said: “Gateway is the most advanced gas storage project in the UK that has not yet committed to construction, so we are delighted to have an organisation with the execution and operational track record of Petrofac to take the project forward through to financing and into construction. As one of the world’s leading service providers to the oil & gas industries, Petrofac’s experience will be invaluable in realising the project’s significant and strategic benefits to the UK and Irish energy markets.”
As at 31 March 2010, Gateway had gross assets of approximately £19 million and reported a loss after tax for the year ended 31 March 2010 of approximately £3 million. Gateway’s directors are led by George Grant and Andrew Stacey of Stag Energy Development Company Limited, which manages the project on behalf of the shareholders. The development and operation of the Gateway Gas Storage project is the principal activity of Gateway.