In the area of exploration, production and liquefaction (upstream) the agreement contemplates the partnership to develop new projects where Repsol YPF will be the operator and holder of 60% of the assets. Gas Natural SDG will hold the remaining 40%.
In the area of transportation, trading and wholesale marketing (midstream), the agreement contemplates both companies creating a joint venture aimed at the wholesale marketing and transportation of LNG. Both Repsol YPF and Gas Natural will hold 50% stakes in this joint venture, in which the chairman will be changed on a rotational basis, and Gas Natural SDG will name the chief executive officer.
At the same time, and according to the agreement, Gas Natural SDG and Repsol YPF will develop in a coordinated manner diverse regasification plant projects where Gas Natural SDG will be the operator, and the regasification rights will pertain to the new joint venture.
This will allow both companies to: improve their competitive positions in the international LNG market; facilitate access to new wholesale markets; increase flexibility in supplying LNG and its destinations; increase business activity potential; and reduce operating and financial risks.
Joint venture to be leading LNG company on world scale
The new joint venture, with both Gas Natural SDG and Repsol YPF holding 50% stakes, will be the third largest LNG company in the world in terms of sales volume, only behind such companies as KOGAS and Tokyo Electric. This joint venture will market LNG from the integrated projects developed by both companies, and will assure its supply to Grupo Gas Natural's retail markets.
The joint venture will develop new international wholesale markets to market LNG from the integrated projects of the two companies. At the same time, it will conduct LNG trading within the wholesale markets, and the transportation of LNG via a fleet of 11 ships, as well as one other that is currently under construction.
New challenges in the LNG market
The signing of this agreement highlights the willingness of Repsol YPF and Gas Natural SDG to take advantage of the complementary nature of their businesses and to meet head-on the changes and challenges occurring in the worldwide LNG market, and which is being characterized by global growth.
This agreement will give both companies the needed critical mass to be involved in large-scale projects reserved for only the largest worldwide operators, and at the same time it will increase competition by utilizing existing synergies, generate cost savings produced by acting jointly, as well as maximizing value by gaining access to new geographical markets.
The Gas Natural SDG - Repsol YPF alliance is in response to the strong increase in worldwide demand for LNG, the growth of the spot market, and the acceleration in the liberalization of global gas and electricity markets.
Both companies have notified Competition authorities of the agreement.
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