Three bids for LNG terminal

Three bids for LNG terminal

BY CAMILO THAME Business Co-ordinator

Sunday, April 29, 2012

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THREE companies have placed bids to build and operate a liquefied natural gas (LNG) floating storage and regasification terminal in Jamaica.

According to a reliable source, Exmar Marine of Belgium, Samsung C&T Corporation of Korea, and Sener Ingeniería y Sisternas, SA of Spain handed in their submissions to the LNG Steering Committee on Friday.

An evaluation will be done before the winning bid is chosen and approved by Cabinet before the end of June.

When contacted, LNG Steering Committee Chairman Chris Zacca declined to give details on the bidding process but said that the interest shown was considered very encouraging.

The LNG project aims to lower energy costs through fuel diversification. The Jamaica Public Service Company (JPS) has committed to construct 360 megawatt (MW) of additional generating capacity, which will run on natural gas.

The utility company says that it expects that it can lower the cost of electricity by up to 30 per cent.

Previously, the Cabinet announced its approval of the formation of Jamaica Gas Trust (JGT), the new company that will handle the purchase and sale of natural gas in Jamaica.

Apart from buying the LNG from the supplier and selling the gas to end users, JGT is supposed to establish a subsidiary that will schedule LNG imports, inventory management, pipeline nominations and gas sales.

Importantly, in order to establish the credit-worthiness of the JGT to satisfy its obligations to the LNG seller and infrastructure provider, it will be capitalised by at least US$100 million ($8.7-billion) of cash, in addition to standby letters of credit totalling another US$100 million from the end users.

According to documentation on the Cabinet website, the Government will soon engage a placement agent to take point on raising the US$100-million funding for the establishment of the JGT. A request for proposal (RFP) has already been issued.

The project also expects to issue the RFP for the natural gas pipeline network next month after the completion of a Front End Engineering Design Study by WorleyParsons, the projects technical advisors.

The Jamaica LNG Project has received six submissions with indicative pricing during the first stage of the RFP for LNG supply in November 2011.

Marubeni Corporation, which has a 40 per cent stake in JPS, is among the six bidders to apply for the supply of LNG. Also up for consideration are Shell International Trading Middle East Ltd, Pace Global, Morgan Stanley and Spanish firms Gas Natural Aprovisionamientos, SDG, SA and Repsol Comercializadora de Gas, SA.

The Government of Jamaica plans to issue the final stage RFP for LNG Supply in mid-May, with firm bids due by end of June 2012.

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