Prospective gas supplier Gasol (GAS:AIM) jumps 6.1% to 19.5p on news it is part of a consortium (Electrogas Malta) which is the preferred bidder on a liquefied natural gas (LNG)-to-power project in Malta.
If it goes ahead the deal would provide diversification from Gasol's current focus; developing a plan to supply LNG through Benin (pictured above) into under-supplied West African markets. We last looked at this story in detail here.
The Maltese project, on which it is partnered with Azerbaijan state energy firm SOCAR, GEM and Siemens (SIE:DE), involves the provision of a floating storage unit (FSU) which will be docked in Delimara, Malta, and the regasification of an initial 55-60 million cubic feet per day of gas from LNG deliveries to Malta.
The regasified LNG will be supplied to Maltese state operator Enemalta's existing 149 megawatt (MW) power plant, which will be converted to operate on gas, and also to a new 200 MW independent power plant to be built, owned and operated by Electrogas Malta. The image below shows the planned layout.
Under the proposed agreement the consortium, in which Gasol has a 30% stake, must pay €30 million in cash to acquire Enemalta's subsidiary Malta Power and Gas. It is expected to take several months for the terms to be finalised and a further 18 months to bring the development on stream at a total cost to Electrogas Malta of around €370 million. It is envisaged 80% of this burden will be met through debt and 20% through equity.
Cantor Fitzgerald analyst Sam Wahab is enthused by today's news: 'This is clearly a significant milestone for Gasol, as the company looks to diversify its exposure across Africa and apply its considerable gas-to-power experience in Malta.
'The inclusion of high profile partners in SOCAR and Siemens clearly adds further validity to the project, which the government described as a ‘world class’ proposition. As such, the company’s long term strategy to supply gas to gas-constrained markets, where liquid fuels are currently being used for power generation, remains firmly on track.'