EIB Lends to Canaries, Majorca Gas Projects
The European Investment Bank (EIB) has signed two loan deals January 23 totalling €155mn ($190mn) for gas projects in Spain.
The first, for €125mn, was signed with Spain’s third largest gas distributor Redexis Gas. It will mainly co-finance 2,900km of new distribution networks for gaseous propane on Spain’s Canary Islands, for possible subsequent conversion to natural gas. Some of the loan is also earmarked to expanding its existing mainland Spain natural gas distribution network – part of which originally also flowed propane, a type of liquid petroleum gas (LPG) that is produced from oil refining. (Spain's Cepsa owns a large oil refinery on Tenerife which to both export and local Canarian LPG markets)
“Redexis Gas has all the financial resources available to undertake this expansion....that will favour the Canarian economy and competitiveness”, said its executive chairman Fernando Bergasa at the signing.
It listed eight districts, including on both main islands of Tenerife and Gran Canaria, where it will roll out the new gaseous propane networks. They are: Las Palmas de Gran Canaria, Telde, Agüimes, Santa Cruz de Tenerife, La Laguna, Arona, Granadilla de Abona, and Puerto de la Cruz.
Redexis Gas, which is 50.1%-owned by US bank Goldman Sachs, however did not respond to NGW about the overall cost of its project. Its press statement though said it was additionally borrowing €300mn from commercial banks and would stump up €300mn cash generated from its business over the next few years. It operates a network of more than 10,000 km in ten regions of mainland Spain, and already in 2015 borrowed €160mn from the EIB towards its expansion during the past three years.
The second EIB loan, for €30mn, to Empresa Municipal de Transportes (EMT) in Palma de Mallorca will contribute toward replacing its all-diesel bus fleet with new, less polluting buses run on compressed natural gas (CNG). The existing bus fleet is at least 14 years old. A new CNG refuelling station will be built, and EMT’s IT, ticketing and fleet management systems will be overhauled. The new buses will be phased in between 2018 and 2023. EU transport commissioner Violeta Bulc said they would “improve the daily lives of commuters and stimulate the local economy.” Gas is delivered to Majorca via a pipeline from mainland Spain built about a decade ago.
In contrast, plans by Enagas subsidiary GasCan to develop Canarian LNG terminals, first on Tenerife (Granadilla) then on Gran Canaria, are still pending, despite being on the drawing board for a decade. The islands are too remote to be economically linked via a natural gas pipeline from Spain. Each of the two small LNG import terminals would cost an estimated €300mn and include a 150,000 m3 LNG storage tank. Enagas either wholly or partly owns nearly all six mainland Spanish large LNG import terminals, and owns the seventh built a decade ago (at Gijon, northern Spain) but not yet put into service.
Update January 25:
Redexis Gas has since told NGW that the EIB loan conditions are flexible about whether its future Canarian pipe network carries propane, or later on natural gas, and that any subsequent conversion to natural gas would be to expand the network and reach more clients and companies. It says it has no involvement in planned LNG terminals on the Canary Islands and does not expect any to be built there during 2018-19.
Update January 26:
Gas Natural-controlled distribution firm Nedgia has told NGW that it has a concession to develop the infrastructure to provide [gasified] LPG to the district of San Bartolomé de Tirajana, in central Gran Canaria, after the Canary Islands government promoted the islands' gasification. However "for the moment we only have the concession and we must to start the development of the project," a spokesperson told NGW January 26. The award of the concession was made in October 2016.