Repsol holds onto Canaport LNG after Shell deal
Shell will supply liquified natural gas to Canaport over the next decade
Saint John's Canaport LNG will remain under the ownership of Repsol even after the Spanish energy giant sold all of its other LNG assets to Shell on Tuesday.
The $6.7-billion deal between Repsol and Shell was announced on Tuesday but the agreement does not include the Canaport LNG terminal.
Repsol owns 75 per cent of the Saint John LNG terminal, while Irving Oil Ltd. controls the remaining 25 per cent share.
The official word from Canaport is that it is operating at 35 per cent capacity. The low capacity may have lowered interest to potential buyers, even if Repsol's other LNG holdings are profitable.
"The North American facility is not included in the sale process as the low gas prices currently seen in the US market do not allow the asset’s medium and long term potential to be adequately valued. Repsol will analyze all available operational, financial and strategic options for this asset," according to a Repsol release issued on Tuesday.
Kate Shannon, a Canaport spokesperson, said in a statement said the company is pleased to remain with Repsol.
"Canaport will continue to operate as normal. In our day-to-day activities we're going to keep producing natural gas to meet the demands of our market," Shannon said.
As part of the agreement, Shell will supply a million tons of LNG to Canaport over the next decade.
Barbara Shook, an analyst with Energy Intelligence, said that is barely worth mentioning.
"One million tons over a 10-year period amounts to about half a billion cubic feet per year. This is a miniscule amount of LNG," she said.
Depending on the size of the ship a million tons of LNG amounts to about one or two deliveries per year, she said.
Canaport said it will also be purchasing additional LNG from other sources.