NEW YORK (Reuters) - Repsol YPF is confident of attracting gas buyers to its nearly complete Canaport liquefied natural gas import terminal in Canada, despite the economic climate, a company executive said on Monday.
Phil Ribbeck, president of Repsol North America, told the Reuters Energy Summit that Canada’s first LNG terminal will begin commercial operations in July and that gas supply agreements will then be signed with potential buyers.
“We’ve been dealing with a number of buyers and they are waiting for the terminal to become operational. Once we do that we should be signing up a bunch (of contracts),” Ribbeck said.
“We already have a number of contracts executed and we should be signing many more over the course of the next few months.”
Ribbeck said that the massive increase in domestic gas production in the United States, coupled with the recession — unforeseen when Canaport LNG began construction — has not dented the need for imported gas in eastern Canada and the northeast United States.
The location of Canaport’s intended markets means it is less affected by the increase in unconventional gas production in the United States, he said.
“The gas supplies being developed in the U.S. today have to come through the pipeline systems that exist today. The northeast is not connected to those supplies,” Ribbeck said.
Also, gas has been competitively priced against oil and coal-fired generation in the Northeast, helping to support demand during the recession.
Canaport LNG is a partnership between Spanish oil major Repsol (75 percent) and Irving Oil (25 percent), under which Repsol sources the LNG for import and markets the gas in the United States and parts of Canada.
Ribbeck said that the first cargo is expected at the terminal from Trinidad in June once final preparations are complete. This cargo will be enough to cool down and test the terminal before commercial deliveries begin in July.
Deliveries will then ramp up toward winter, when the terminal is expected to import 0.7 billion cubic feet per day of LNG, though estimates have been made difficult without an exact timeline for completion from the terminal builders.
“We have been trying to get a start-up date from our contractors so we have had to continue to revise our plan for cargoes, but we expect that we will be operating at close to 70 percent design capacity of 1 bcf per day,” he said.
This will not happen straight away, though, and by August imports are expected to be about 0.4 to 0.5 billion cubic feet.
Repsol, which holds a stake in Atlantic LNG production in Trinidad & Tobago, also supplies the Spanish and Argentine markets and is well-placed to take advantage of Atlantic Basin arbitrage.
A downturn in Spanish LNG demand due to the recession has resulted in Repsol sending some cargoes to the Cove Point terminal in Maryland, cargoes that will soon head to the Canaport terminal instead.
“Spanish natural gas demand is really down. That is why you are seeing some cargoes head across the Atlantic at this point in time,” Ribbeck said.
He said that exports to Argentina this year will be similar to last year, around one cargo per month, though this will depend on Brazilian gas demand which determines how much gas Argentina can take via pipeline from Bolivia.
Repsol will next year begin exporting LNG from Peru, which will supply Argentina, Spain, Canada and potentially the Pacific Basin markets. More LNG vessels are expected to be contracted for this, Ribbeck said.
Reporting by Edward McAllister; editing by Jim Marshall