June 18, 2009 / 3:16 PM / 11 years ago

UPDATE 2-Repsol signs Canaport LNG natural gas deals

* Repsol hopes sell 2,000-4,000 decatherms from Canaport

* First LNG tanker expected June 22 from Trinidad

* Tanker comes as U.S. gas demand is low

(Recasts, adds gas market context, detail)

By Edward McAllister

NEW YORK, June 18 (Reuters) - Repsol (REP.MC) has signed natural gas supply deals from its newly built Canaport liquefied natural gas import terminal in New Brunswick, company executives told Reuters Television on Thursday.

Vice President of Repsol Energy North America Vincent Morrissette said that despite recession-driven falls in U.S. gas demand, the market in the Northeast is strong and buyers are queuing up.

“We have signed a few deals and we have a lot of interest from our customers,” Morrissette said. “We are actively discussing and negotiating longer-term transactions.”

He said that Repsol, responsible for marketing the gas from Canaport into the United States, is targeting to sell 2,000 to 4,000 decatherms per day of gas from the terminal, possibly increasing over time depending on demand this winter.

One million decatherms is the equivalent of heating about 5 million homes, he said.

Canaport LNG, a partnership between Repsol (75 percent) and Irving Oil (25 percent), is expected to receive its first cargo of LNG on June 22, said Benjamin Palomo, Repsol’s Executive Director of LNG in the same interview.

Repsol’s Bilbao Knutsen LNG tanker left Trinidad earlier this week heading north to Canaport. It will act as a test cargo before commercial deliveries begin in July.


The tanker will arrive at Canaport as U.S. natural gas stocks hit record highs for this time of year. North American gas demand has tumbled while domestic production has increased, leaving the market oversupplied and inventories abrim.

However, Canaport is confident of attracting future demand as Canadian reserves that serve the U.S. Northeast deplete and demand picks up in the coming years.

“We take a long-term view. This is a project for the next 25 years and probably thereafter,” Palomo told journalists at a press conference in New York later Thursday morning.

Trinidad will supply most of the gas to Canaport this year, which will be supplemented by supply from the Peru LNG project in 2010.

When Peru LNG comes online it will dedicate all its capacity to Canaport until a contract begins to supply Mexico with LNG in 2013. After that it will supply one third of its capacity to Canaport and two thirds to Mexico.

And in the future, pending production projects in Angola and possibly Iran could help bolster supply to Canadian shores.

In the mean time, Repsol is in discussions with other suppliers that could also supply to Canaport.

“We are talking to many parties in the industry,” Palomo told Reuters TV. “At the moment, there is no shortage of spot gas to bridge the gap until Peru comes online.”

Palomo said that four new tankers will be added to its joint fleet with Gas Natural once Peru LNG comes online. (Reporting by Edward McAllister; Editing by Lisa Shumaker)

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