RWE pays $500M for half of LNG group Excelerate

Friday, 15 February 2008

The German group said the shareholding would enable it to expand its LNG activities.

The purchase will also help Excelerate develop further at a time when its deepwater and gasport LNG facilities are proving reliable, but when in operation are hobbled by the global scarcity of LNG supplies.

Excelerate currently owns and manages three import facilities for LNG. As well as the Teesside GasPort in the UK, it has two offshore, ship-based operations in the Northeast of the US and offshore Louisiana in the Gulf of Mexico connected to US gas grid.

RWE is already working with Excelerate to develop a GasPort facility at the German North Sea port of Wilhelmshaven. This facility will be similar the UK operation.

The German company, based in the city of Essen, said its acquisition of half of the US company would strengthen cooperation between the two and contribute to developing RWE’s LNG business.

“Linking Excelerate’s business with RWE’s gas activities provides a platform for strong growth in the gas market,” said RWE Chief Executive Jurgen Grossmann.

“We are active both in the pipeline and the LNG business. Our partnership is of strategic importance,” Grossmann added.

Excelerate currently has long-term charter arrangements for four operational LNG vessels, three of them with onboard regasification equipment.

The fleet could be increased to nine vessels by 2010. Each vessel can transport roughly the same amount of gas that is required to heat around 40,000 homes for one year, RWE said.

The use of ships as regasification facilities is becoming more attractive as onshore terminals become more expensive to build because of a shortage of engineering capacity and materials.

Excelerate owns and manages three import facilities for LNG. In addition to Teesside GasPort in the UK there are two so-called Gateways connected to the US gas grid. More GasPorts are planned, the RW statement said.

“The gas market is growing and LNG will play an increasingly important role because of its flexibility and its potential for covering demand peaks,” said Stefan Judisch, head of RWE Gas Midstream, the unit that will cooperate with Excelerate on an operational level.

Excelerate’s business also provides “an ideal link” between RWE’s gas exploration and production activities, particularly in North Africa, its customer base and the global gas market, the German company said.

RWE is buying the 50 percent stake from the owner of Excelerate, George B. Kaiser, who will continue to retain his other half of the company.

“This partnership enables us to more fully leverage the flexibility our technology provides along the LNG value chain and to maintain our innovative leadership in offshore LNG,” said Rob Bryngelson, Excelerate’s Chief Executive.