LNG

Enagas, the Spanish natural gas network and LNG terminal owner, has entered the US energy infrastructure market by investing in Tallgrass Energy, whose assets include 11,000 kilometres of transmission pipelines.

The Spanish company said the transaction is part of its strategy to invest in core business assets in growth markets on an international basis alongside strategic partners.

Enagas, which already has investments in LNG import terminals on the American continent, at Altamira in Mexico and Quintero in Chile, has entered into an agreement with the equity funds, Blackstone of the US and GIC of Singapore, to invest $590 million for a 10.93 percent indirect ownership interest in Tallgrass Energy.

Tallgrass, based in Leawood in the Midwest state of Kansas, has assets including the Rockies Express Pipeline, one of the largest US pipelines that is being transformed into the nation’s northernmost bi-directional natural gas gathering system.

Enagas explained that its investment is in the holding company that owns 100 percent of TGE’s general partner, as well as 43.91 percent of the economic interests in TGE .

The investment is structured so that Blackstone retains a majority stake, GIC has a minority shareholding, as does Enagas with 24.90 percent of the holding company.

Following the closing of the transaction, Enagas has agreed to acquire an additional 3.52 percent of the holding company for around $83M, subject to completion of certain conditions. The Spanish company has also agreed to future investments of up to $300M in TGE.

“As an industrial partner, Enagas will have a seat on the company's Board of Directors, contributing its know-how in operating and developing energy infrastructure,” said Enagas.

Enagas has four domestic LNG import terminals around Spain at Barcelona in the northeast, Cartagena in the southeast, Huelva in the southwest and Gijon in the northwest.

It also owns a 50 percent stake in the facility serving the northwest city of Bilbao.

Other investments held by Enagas include its stake in Trans Adriatic Pipeline, part of Europe’s Southern Gas Corridor.

It is also part of a European gas grid group that acquired control of the Greek natural gas transmission operator DESFA.

“Enagas embarked on its internationalisation in 2011 as a part of an ongoing strategy with two main objectives, maintaining the maximum efficiency and security in the operation of the Spanish gas system, and to continue expanding as a company,” it said.

“This international expansion also helps drive the business of other Spanish industrial companies related to the energy sector,” added Enagas.

“This acquisition allows Enagas to unlock the value of its vast experience in developing and operating gas infrastructure and strengthen its position as industry leader and expert,” stated the company.

Wallace Henderson, Senior Managing Director in Blackstone Infrastructure Partners, said he was delighted Enagas had joined the investment consortium.

“With extensive midstream operations around the world, they bring valuable perspectives to Tallgrass that will benefit our investment and we look forward to their contributions,” added Henderson.

US natural gas spot prices rose at most locations with the benchmark Henry Hub hitting $4.59 million British thermal units amid working gas storage concerns and high seasonal demand, including for new liquefied natural gas Trains coming on stream on the Gulf Coast.

Rising US natural gas domestic consumption and LNG shipments overseas, along with cross-border pipeline exports, are coinciding with increasing production, keeping prices stable even amid relatively low storage levels.

ExxonMobil Corp. has signed a cooperation framework agreement with the Guangdong provincial government of southeast China to advance discussions concerning the proposed construction of a chemicals complex with an LNG import project as part of the package.

Freeport LNG, the project at Quintana Island in Texas led by US energy entrepreneur Michael Smith, has signed a preparatory accord for a future tolling services agreement with Japanese trading house Sumitomo Corp.

Texas LNG, one of several LNG export projects being developed on the Gulf Coast near the port of Brownsville, said it was one of the ventures provided with anticipated dates for issuance of an environmental impact statement and a final regulatory deadline under the new speeded-up process.

The US Federal Energy Regulatory Commission has issued environmental schedules for 12 liquefied natural gas export plant applications currently pending, shortening the waiting time by between up to nine months and a year.

Eni, the Italian energy company that has made large natural gas discoveries in Mozambique and Egypt over the past few years, has acquired 124 exploration leases covering 350,000 acres onshore in the eastern part of the Alaska North Slope from Caelus Alaska Exploration Co., a privately-held US exploration and production company.

US regulators have approved commissioning of the first Train at the Freeport liquefied natural gas export plant at Quintana Island in Texas, further boosting Gulf Coast production prospects.

Air Products, the US industrial gases company and LNG equipment-maker, said it had agreed to acquire the Rotoflow turboexpander business from US energy services company Baker Hughes-GE.