Petrofac purchases an interest in UK based Gateway Storage project

Petrofac announced Monday that it acquired a 20 per cent interest in Gateway Storage Company Limited. The move is aimed at progressing and developing the Gateway Gas Storage project in the East Irish Sea. Sources have placed the cash consideration for the investment at up to £33 million over time, funded from cash resources.

This is split into a fixed upfront payment and additional contingent payments subject to key project development milestones being achieved, including the outcome of a further successful equity sales process.

Petrofac will join Gateway as the technical project operator, jointly responsible for developing the project, and will be represented on Gateway’s Board. The front end engineering and design (FEED) phase of the project is nearing completion and the focus is now turning to project execution and finalization of the consortium of storage capacity holders and investors to develop the project towards the final investment decision in 2011.

The Gateway Storage project, which would add nearly 30% to the current gas storage capacity in the UK market, secured the first Gas Storage Licence from the UK Department of Energy & Climate Change in February 2010 after receiving the main planning and environmental consents and permits in late 2008. Gateway is targeting 2016 for the commencement of storage services to the UK energy markets.

Rob Jewkes, managing director, Petrofac Energy Developments said Petrofac is pleased to join with Gateway to progress this strategically important and well advanced storage project. With FEED activities largely complete, the firm is entering the project at this stage to bring confidence to the investor group that execution and delivery objectives for the complete facilities can be met, and will utilize the full capabilities of the group to optimize the facility design and deliver the project.

On his part though, George Grant, chairman of Gateway Storage Company Limited said Gateway is the most advanced gas storage project in the UK that has not yet committed to construction, so the firm is delighted to have an organization with the execution and operational track record of Petrofac to take the project forward through to financing and into construction.

As one of the world’s leading service providers to the oil & gas industries, Petrofac’s experience will be invaluable in realizing the project’s significant and strategic benefits to the UK and Irish energy markets.

6 Dec 2010.