Final investment decision approaching for Spanish storage project
A final investment decision is approaching for one of Spain’s biggest underground storage projects, at Castor in Tarragona. The project, to be operated by Canadian developer Eurogas, finished its public consultation phase last week. Eurogas has now estimated the cost of the 1.9 billion cubic metre (Gm3) project at around EUR 1 billion.
A government approval appears likely, given that the project was granted high-priority status in Spain’s revised energy plan, published this spring. Eurogas would then hope to finish construction by 2009.
“On the technical side, the Front End Engineering and Design (FEED) study will be completed in October 2007, and will provide information of a fixed price,” Eurogas said on its website. Spanish construction firm ACS – a shareholder in power supplier Union Fenosa – has already qualified as the project’s engineering contractor. The group also has a 5% stake in the project (see ESGM 12.206).
The Castor site would be one of the first underground storage projects to come on-stream during Spain’s current energy regulation regime. It is the first and biggest project to be operated by a company other than Spanish gas TSO Enagas.
The high risk involved in exploring for underground storage and a low guaranteed rate of return have led to a lack of new sites in Spain. This means that although natural gas demand in Spain has risen by around 15% annually in the past decade, no new underground storage facilities have been built.
In order to comply with regulation on minimum supply levels, shippers active in the Spanish market have resorted to using LNG cargoes as balancing. Any ship less than three days away from a Spanish port can be counted as already in the system. IS
Other Related Stories
