BG To Build Italian LNG Terminal

BG Group has received approval to construct and operate a EUR330 million liquefied natural gas (LNG) importation terminal in Brindisi Port, on the southeast coast of Italy.

Negotiations for LNG supply to the terminal and for onward sale to gas users are being progressed. BG Group aims to sanction the project by the end of 2003.

The project was approved via the Conference of Services 'Article 8' comprehensive authorization process (Bassanini law/340, 2000) held by the Ministry of Productive Activities and representing national, regional and local authorities. A formal decree is expected to be issued shortly.

The regasification terminal, proposed to be constructed in two phases and operated by BG Group, would enable imports of natural gas into the Italian market by the end of 2006. Phase 1 envisages a throughput of 3 million tons per annum (mtpa) increasing to 6 mtpa in the second phase.

Martin Houston, Executive Vice President, BG Group, said: "Approval for the Brindisi project gives BG Group the go-ahead to make one of the largest ever investments in Italy by a UK-listed company. Energy demand continues to rise in Italy and with it comes the opportunity for BG Group to diversify into the liquefied natural gas sector and deliver new sources of supply. This move enables us to expand our commitment to Italy and play an increasing role in the liberalizing energy market. As a Group, we continue to consolidate our position in the Mediterranean region and grow as a liquefied natural gas supplier and gas wholesaler."

Italy is a net importer of natural gas and has one LNG receiving terminal in operation on the north-west coast of the country. Over the last decade, energy demand has been continually growing and in 2010 is forecast to be about 25-30 percent higher than today's present demand. Predominantly, this growth is expected from the power generation sector.

The Brindisi terminal, which would be the first to be built in the South, is strategically placed on the Mediterranean Sea coast to receive imports from North Africa and the Gulf States. Its location is in close proximity to reach those areas of high power generation demand in the Puglia region and surrounding regions.

The importation terminal is within five kilometers of Snam Rete Gas's 29,600 kilometers national gas transmission and distribution network.

Environmental impact and safety studies have been carried out which support the use of the Brindisi Port and harbor as having suitable deepwater marine facilities for a project of this scale. Preliminary Front End Engineering Design (FEED) work has been conducted and further work to finalize the plant design is under way. In addition, contractors are being pre-qualified for ground investigations.

It is estimated that up to 1,000 jobs could be generated during the construction phases and about 250 direct and indirect jobs created over the operational lifetime of the plant.