Aventura is an exploration and production company with a 65% participating interest in, and operatorship of, the 111 square kilometer, onshore Central Block exploration license in south Trinidad. Petrotrin, the state-owned hydrocarbon company, holds the remaining 35%. The estimated proved and probable reserves in the license are approximately 0.5 trillion cubic feet.
Martin Houston, Executive Vice President, BG North America, Caribbean and Global LNG, said:
"Trinidad and Tobago is of core importance for BG Group, and this acquisition further strengthens and complements our existing business in the country. Through BG's involvement in all aspects of the LNG chain, we are ideally placed to realize synergies not readily accessible to others. Aside from the discovered reserves, the key factors in our evaluation of the asset are the considerable exploration potential and anticipated low capital and operating costs, given the asset's onshore location and proximity to the new Cross Island Pipeline."
Aventura's shares are listed on the Toronto Stock Exchange, and approximately 72% is owned by the Vermilion Energy Trust, through its subsidiary Vermilion Resources Ltd. (Vermilion).
The Board of Directors of Aventura unanimously intends to recommend BG Group's takeover bid. In addition, Vermilion and the Directors of Aventura have irrevocably agreed to accept the offer, and consequently BG now has commitments to accept the offer from the holders of approximately 74% of the outstanding shares of Aventura. The offer, once made, will remain subject to a number of conditions, including the acceptance of the offer by the holders of 90% or more of the shares, and there being no material adverse change to Aventura.
In 2000, Carapal Ridge, a structure within the Central Block, became the largest onshore discovery made in Trinidad and Tobago in the last 40 years when it tested at 62 million standard cubic feet of gas per day (mmscfd) and 1,625 barrels of condensate per day (bcpd). The discovery well is on an extended production test with approximately 20 mmscfd and about 500 bcpd being sold to Petrotrin. Gas is transported via a 12km 10-inch pipeline that connects to NGC's network. Other discoveries in the Central Block include the Corosan-1 well, which, in late-2001, tested at 8.2 mmscfd, and the Baraka-1 well, which, in July 2003, tested at 22 mmscfd and 660 bcpd.
BG's acquisition of Aventura is subject to Canadian securities law. BG expects the offer to be mailed to Aventura shareholders by the end of March. BG's offer must remain open for at least 35 days after the bid circular setting out the details of the offer is posted to Aventura's shareholders, and may be extended at BG's option.
BG Group has interests in some 20 countries worldwide, with Trinidad and Tobago constituting one of its core geographical areas. The company currently supplies gas into the domestic market from the Dolphin field and into Atlantic LNG, for subsequent export to North America and Europe, from its North Coast Marine Area fields. It also continues to invest further in LNG expansion and seeks to create and develop upstream opportunities to supply its capacity in Atlantic LNG.
The new 56-inch Cross Island Pipeline, whose route will lie adjacent to the Central Block, is being constructed by NGC to transport gas from the east cost of Trinidad to Atlantic LNG in Point Fortin.
The US$1 billion Atlantic LNG Train 1, in which BG is a 26% shareholder, began operations in April 1999, and exports LNG to markets in the USA, Puerto Rico and Spain. The other shareholders are BP (34%), Repsol (20%), Tractebel (10%) and NGC (10%).
In February 2000, a US$1.1 billion two-train expansion project was approved by the Government of Trinidad and Tobago, with Train 2 starting operations in August 2002 and Train 3 coming on-stream in April 2003. Shareholders in Atlantic LNG Trains 2 and 3 are BG (32.5%), BP (42.5%) and Repsol (25%). Gas supplied to Trains 2 and 3 by BG has been sold under a long-term contract to BG Gas Marketing Limited (BGGM) for importation into the Elba Island LNG receiving terminal in Georgia, USA, where BG LNG Services (BGLS), a wholly owned BG subsidiary, has rights to the capacity. Until the long-term contract became effective, BG equity production was supplied to the Lake Charles terminal in Louisiana, in which BGLS holds 100% of capacity rights. In June 2003, the Government of Trinidad and Tobago approved the construction of a fourth Atlantic LNG train. At an estimated cost of US$1.2 billion, ALNG 4 is expected to be the largest LNG train ever constructed. Together with its sister trains, overall LNG production from Atlantic LNG should increase to over 15 million tonnes per annum. BG's shareholding in ALNG 4 will be no less than 26%. The associated agreements are expected to be finalised in the near future.
In December 2003, BGLS and BGGM completed an agreement with El Paso Merchant Energy (EPME) to acquire all of EPME's capacity in the Elba Island LNG regasification terminal near Savannah in Georgia and related LNG purchase and gas sale agreements. Through a services agreement with the terminal owner, Southern LNG Inc., BGLS will, from 1 January 2004 to 1 December 2023, hold firm capacity rights at the terminal of 446 mmscfd.
In March 2003, the Federal Energy Regulatory Commission (FERC) gave approval for expansion of the Lake Charles terminal from 630 mscf to 1.2 billion cubic feet per day (bcfd). This first phase expansion is expected to commence operations at the beginning of 2006. On 2 February 2004, BGLS reached agreement with Trunkline LNG and Trunkline Gas for a further expansion, which will result in an increase of terminal send-out to 1.8 bcfd from the middle of 2006. This second expansion is subject to the approval of FERC.
BGLS, in conjunction with Keyspan, is also seeking to develop and upgrade an LNG terminal at Providence, Rhode Island. If successful, this may be the first import terminal to open in the USA for several years.
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