Gas ships made in Korea

BG has entered into an agreement with Samsung Heavy Industries Limited of Korea for the purchase of two new build liquefied natural gas (LNG) ships.

The two 138,000 cubic metres ships are due for delivery in the second and third quarters of 2004 respectively. BG has also secured options with Samsung for a further six new build ships – three for delivery in 2005 and the remaining three to follow in 2006. The price of the ships is commercially confidential but is less than three per cent of BG Group’s current market capitalisation.

Samsung will build, equip, launch and deliver the ships using the Gaztransport & Technigaz (Mk III) membrane cargo containment system – the standard LNG ship specification. The vessels will utilise dual-fuel steam turbine propulsion enabling them to sail at an average speed of 20 knots and a cruising range of about 21,000 nautical miles.

It is envisaged that these two new build ships will be used as part of an existing Contract of Affreightment that BG has to transport its equity LNG from Trinidad to the USA. This LNG comes from the two-train expansion currently taking place at the Atlantic LNG plant in Point Fortin, Trinidad, which is scheduled to come onstream in 2002 and 2003.

In the interim period, BG will use two 125,000 cubic metres ships to transport this LNG until these new ships are delivered in 2004. The 125,000 cubic metres ships will be used for other LNG trades thereafter.

Four days ago, the BG Group announced the sale of BG Storage Limited and associated assets to Dynegy, of the USA for £421 million.

The sale is subject to the consent of the Gas and Electricity Markets Authority, The Department of Trade and Industry and the Office of Fair Trading.

BG Storage provides gas storage services in Great Britain. Its assets include the partially depleted Rough offshore storage facility in the southern North Sea, a 73 per cent shareholding in the Easington onshore gas processing terminal, Humberside, and nine salt cavities in Hornsea, east Yorkshire. In addition, the business has recently secured planning permission to develop six salt cavities at Aldbrough, near Hornsea.

The associated assets to be sold include the remaining 27 per cent interest in the Easington onshore gas processing terminal, which is owned by another BG Group subsidiary, the Amethyst gas processing and condensate transportation agreement, and BG Group’s interest in the offshore York discovery which extends into Block 47/3d.

BG Storage has about 260 employees, 40 of which are based at the company’s headquarters in Solihull, West Midlands. The business will be sold as a single entity and employees will transfer to the new owners on completion of the transaction, which is anticipated for September.

BG Group will continue to have a commercial relationship with BG Storage to enable BG Group to carry out its gas trading activities.