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Uruguay's Gas Sayago to entertain long- and short-term LNG offers

21 Nov 2013 19:09:44 | glm

The Gas Sayago joint venture aims to award a single long-term contract to import between 500,000 tonnes per annum (tpa) and 700,000tpa of LNG by mid-2014 into its 263,000cbm GNL Del Plata floating storage regasification unit (FSRU) project, planned close to the Uruguay capital Montevideo from end 2016, company president, Cesar Briozzo announced at the World LNG summit in Paris on 20 November.

Whilst it is understood to have narrowed an array of non-binding bids to a shortlist of just three, Gas Sayago also intends to sign a number of master sales agreements enabling the widest possible pool of suppliers to participate in its short-term buy tenders.

Before the arrival of what would be the world’s largest FSRU at Punta Sayago by the end of 2016, the new import consortium made up of Uruguayan state oil company ANCAP and state-owned gas utility UTE will first receive the 145,000cbm GDF SUEZ Cape Neptune in March 2015 as a bridging FSRU.

Any deliveries to the GDF SUEZ Cape Neptune will be procured on a spot basis, Briozzo told ICIS on the sidelines, though in the 18 months until the bigger vessel comes into place the company may only purchase one or two cargoes, he added.

Uruguay’s demand is slated to cover only one-half of the terminal’s initial 10 million cubic metres (mcm)/day regasified send-out capacity with gas-hungry Argentina next door is expected to cater for the remaining half.

A memorandum of understanding (MoU) was signed by the state oil companies of Argentina and Uruguay, YPF and ANCAP respectively, on this subject in early September ( see GLM 5 September 2013 ).

Following the start-up of long-term contractual supplies, tenders for either a single cargo or a short-term string would continue with approximately 80% of the terminal’s final 15mcm/day nameplate regasification capacity to remain unaccounted for.

While the long-term contract is needed to give Uruguayan downstream electricity generators price stability as well as security of supply in parallel to their existing 20-year contracts for wind-based power generation, the reason behind opting for such a large terminal, according to Briozzo is “for optimisation purposes” as a domestic “back-up to wind energy” and also for Argentina.

Approximately 60% of Uruguay’s energy matrix is produced by hydroelectric power but this can change drastically from year to year with costly fuel oil providing most of the balance to fill any power generation gaps. LNG is seen as economically more attractive than oil as a means to react to those unpredictable shortfalls in hydroelectric or wind power.

Gas Sayago is interested in LNG offers on any manner of pricing basis – whether it be indexed to crude oil, Henry Hub, or a mixture of the two, Briozzo said.

France-headquartered GDF SUEZ and Russia’s Gazprom are understood to have shown interest in providing LNG to Uruguay, and GDF SUEZ is understood to be on the shortlist of long-term suppliers.

Gazprom has recently agreed to offtake LNG from the Pacfic Rubiales project in Colombia from 2015, while GDF SUEZ had earlier won the contract to build, own and operate the GNL Del Plata project in May ( see GLM 16 May 2013 ).

Construction of the breakwater at Punta Sayago is scheduled to start next week in early December and the FSRU provider, MOL is understood to have placed an order at a Japanese shipyard, according to Briozzo.

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