National Grid Transco Confirms Grain LNG Importation Terminal is Operational

National Grid Transco (NGT) today announces that its new £130 million Liquefied Natural Gas (LNG) importation terminal at the Isle of Grain in Kent has completed the final stages of commissioning, and is now available for commercial operations. The facility has the capability to import and process 3.3 million tonnes per year, representing around four per cent of the UK’s current annual gas demand.

The Isle of Grain site, which is owned by Grain LNG, a subsidiary of National Grid Transco, is the first modern LNG importation terminal in the country and heralds the return of large scale LNG importation into the UK for the first time in over 20 years.

The successful delivery of the commissioning cargo by BP/Sonatrach aboard the Berge Arzew, on 4 July 2005, enabled the final stage of the terminal’s commissioning process to be completed. The current LNG capacity at Grain has been acquired by BP/Sonatrach, under a 20-year contract, who will determine actual LNG throughput. The terminal will be used to berth and unload LNG ships, and process LNG prior to its regasification and nomination for delivery into the National Transmission System (NTS) and Southern Gas Networks.

NGT Board director, Edward Astle, said, “We are delighted Grain LNG is now operational and ready to receive its first commercial cargo. This marks the completion of the first phase of National Grid Transco’s planned £500 million investment in the site, in order to help increase and diversify the sources of gas supplies and play a key role in meeting Britain’s future energy needs.”

Further development at the Grain LNG terminal is now underway to triple capacity by the end of 2008. When complete, this further £355 million investment will allow the terminal to import an additional 6.5 million tonnes of LNG per annum, taking its total planned capacity to 9.8 million tonnes and representing around 12 per cent of the UK’s current annual gas demand. Long-term contracts have been signed with Sonatrach, Gaz de France and Centrica for use of this expansion capacity.

NGT Media Relations:
Clive Hawkins
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+44 (0) 7836 357173(m)

Chris Mostyn
+44 (0)1926 655275
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Christine Riches
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NGT Investor Relations
+44 (0)20 7004 3169

Citigate Dewe Rogerson
+44 (0)20 7638 9571 -  Anthony Carlisle

Britain’s gas demand is projected to increase by at least 15 per cent in the next ten years. As production from North Sea gas fields declines, dependence on gas imports is forecast to approach 50 per cent by 2010.

Government and industry forecasts recognise the need to secure long-term gas imports. LNG imports will add to the diversity of gas supply and enable gas to be released into the system quickly to meet demand requirements.

The Grain site has been associated with LNG storage since the early 1980’s. The early facilities liquefied gas taken from the National Transmission System, and enabled approximately 200,000 cubic metres of LNG to be stored on site.

In October 2003, planning permission was granted to convert the site into an LNG importation terminal as it had required a new deep-water jetty on the River Medway estuary, to allow docking of purpose built LNG ships, with capacities of up to 205,000 cubic metres.

The terminal is now being further expanded with the construction of three additional total containment storage tanks of 190,000m3 capacity each, as well as associated vaporisation equipment and tie-ins to the existing facility. A contract to carry out this work was agreed with CB&I John Brown in March 2005, and will increase the total storage capacity at site to approximately 770,000 cubic metres of LNG.

LNG is natural gas liquefied by refrigeration to a temperature of around -160C, a process that reduces its volume to 1/600th of that at normal temperature and enables safe bulk transportation by ship.