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    MNM Service What is it? Latest Edition Search Archive
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World Energy News From the Communications Centre Contributed by Aristide Mbiock IJmuiden, NL, 23rd July 2001 - Ref.:0107art20
BG sails into LNG transport market with ship orders BG, the UK oil and gas exploration and production group, said on Thursday it had ordered two new liquefied natural gas ships in a move that will allow it to enter lucrative sub-letting deals for its chartered vessels. The company refused to disclose the value of the order from Samsung Heavy Industries of Korea but said the price would be "less than three per cent of its £9.8bn ($13.7m) market capitalisation." This would put a value on the ships of up to £294m, though the industry standard is more like £110m a vessel. An official from the group said the ships would be used to export LNG from the Point Fortin plant in Trinidad to the bouyant US market, which has a shortage of home-produced gas. The LNG would come from a two-train expansion of the plant, in which BG holds a 26 per cent stake, scheduled for completion in 2002 and 2003. It will be exported to the US under an existing long-term contract of affreightment. The ships are due to be delivered in 2004, but BG said it had two ships in place under a long-term charter agreement with Golar LNG, a Norwegian shipping company, to make deliveries during the intervening period. The company has also secured options to buy six further ships from Samsung - three for delivery in 2005 and the remaining three in 2006. Analysts said the acquisitions would increase BG's shipping flexibility, freeing up vessels that BG controls under the highly favourable Golar agreement to sublet to other LNG producers. "There is a highly competitive market for LNG ships at the moment and in the past two years BG has made a significant part of its profits from its shipping activities," said Iain Reid of UBS Warburg. BG is understood to be chartering the Golar ships at $35,000 a day and could sublet them for up to $100,000 a day at current market prices. Earlier this month Golar said it may take legal action to get out of the agreement, which was made two years ago by Osprey Maritime, a company acquired by Golar at the start of the year. Martin Houston, executive vice-president of BG, said the new ships would consolidate the group's growing position in the LNG market. "The options over other new-build ships leverages our ability to transport LNG when our Trinidad and Egypt LNG projects come to fruition, and to carry other parties' LNG," he added. BG, which demerged from its regulated pipeline business Lattice last year, wants to transform into an integrated gas company in growing international markets. It sees the US market as one of its key target areas. In May it made its first direct move into the US by agreeing to take all of the import capacity at the Lake Charles LNG plant in Louisiana - the largest such facility in North America - for 22 years. The US gas market is the largest in the world with annual demand of 21.7 trillion cu ft in 1999. According to the Energy Information Administration, which compiles data and forecasts for the US government, demand is set to increase by 60 per cent by 2020.
BP Joins Alliance to Save Energy; Only
Oil Company Partners With 70 Leading Companies In Their Industries Promoting
Energy Efficiency The first petroleum company in the world to recognize climate change as a threat to the environment, BP today becomes the only oil company to join the Alliance to Save Energy, which includes 70 other leading companies in their industries that are committed to promote energy efficiency domestically and overseas. "We are pleased to have BP join the Alliance to Save Energy. As the world's third largest oil company, BP is a good example of how the private sector can utilize energy efficiency to not only affect their bottom line but also to improve the environment," states Alliance Chairman U.S. Senator Jeff Bingaman (D-N.M.) who is also Chairman of the Senate Energy and Natural Resources Committee. "If a global company as diversified and energy intensive as BP can address their corporation's energy usage through efficiency and conservation measures, then other firms should certainly be able to painlessly follow suit," explains Alliance President David M. Nemtzow. Nemtzow is referring to BP's widely lauded program to control their greenhouse gas emissions through an internal program of corporate energy management and emissions trading among individual business divisions. In 1997 BP Chairman and CEO Sir John Browne outlined an agenda to address the issue of climate change. Since then BP has adopted a precautionary approach to climate change and recognizes that climate change is a genuine public concern. Faced with this reality, BP has set itself a goal to reduce its greenhouse gas emissions by 10 percent by the year 2010 and has already achieved their midway milestone. Speaking on behalf of BP, U.S. Regional President John Manzoni said, "We are excited about our new partnership with the Alliance and look forward to working with the Alliance, and its members to raise the profile of responsible energy management at our facilities in the U.S. and around the world. BP recognizes the role energy plays in the economic security of every country and the personal security and quality of life of every individual. Promoting a balanced approach of conservation, energy efficiency, exploration and technology development is something we must all be focused on and involved in. We view the Alliance as a key conduit in the constructive engagement process concerning these energy policy issues with both the Administration and Congress in the current policy debate." BP is expected to play a role in the Alliance's recently launched initiative to promote leadership in corporate energy management among the nation's leading CEOs and industry leaders. "We hope that corporate leaders like Sir John Browne can lead by example in the promotion of energy efficiency at their facilities and those of their suppliers," concludes Nemtzow. The Alliance to Save Energy is a coalition of prominent business, government, environmental, and consumer leaders who promote the efficient and clean use of energy worldwide to benefit consumers, the environment, economy, and national security.
Eon gets stake
in Ruhrgas via BP asset swap BP and Eon on Monday agreed a multi-billion swap of assets that will make the UK oil major the leading petrol retailer in Germany and Europe and will give the German utility a key stake in Ruhrgas, Europe's biggest gas distributor. The deal marks a further step for Eon, which this year took over Powergen of the UK, along the road to becoming an international multi-utility. Ruhrgas is the largest foreign shareholder in Gazprom of Russia, the source of much of Europe's future gas. BP's acquisition of Eon's Veba Oil and its Aral chain of service stations will also make the UK-based group the number one petrol retailer in Germany, with a 25 per cent market share, and the leader in Europe, with a 16 per cent average market share. Regulatory approval by the European Commission competition authorities will be needed for the oil deal, while the increase of Eon's stake in Ruhrgas may be vetted by Germany's national cartel office. At a joint press conference with BP in his company's Dusseldorf headquarters, Ulrich Hartmann, Eon's chief executive, said BP's 25.5 per cent stake in Ruhrgas would boost Eon's holding in the gas distribution giant to just under 30 per cent. He refused to disclose Eon's further intentions towards Ruhrgas, but one German analyst commented: "One could argue that Eon already controls Ruhrgas." "Eon's wish to deepen its gas interests and exit downstream oil has presented BP with a unique opportunity to realise two strategic aims - to achieve market leadership at the heart of Europe and realise excellent value for our stake in Rurhgas," said Lord Browne, BP's chief executive. He said he had long wanted to unload his company's "passive financial investment" in Rurhgas. The Ruhrgas stake was acknowledged to be the key to the deal, and to some confusion about its total value. BP valued the deal at about $4bn, placing only a $1bn value on its Ruhrgas investment, while Eon put the deal at E6.5bn ($5.5bn) by valuing its planned purchase of a quarter of Ruhrgas at E2.4bn. With the unusual situation of the buyer putting a higher value on his purchase than the seller, analysts said it was hardly surprising that both sides were expressing satisfaction with the deal. The agreement is structured to take place in two stages, essentially for reasons related to new capital gains tax changes in Germany. BP will this year provide $2bn and assume nearly $1bn of Veba's debt in the form of a capital increase to give it 51 per cent of Veba Oil. It will then be able to exercise a $340m put to buy Eon out of Veba entirely next year. In a similar two-stage procedure, Eon will take 51 per cent of BP's Ruhrgas investment this year, and the remainder next year. Lord Browne said BP will sell Veba's upstream oil exploration and production assets. BP was advised by Deutsche Bank and Eon by Credit Suisse First Boston.
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