Skangass and Preem Sign Swedish LNG Deal

Norwegian Skangass and Sweden's largest oil company Preem have today announced the signing of a deal for LNG supply to Preem's refinery on the west coast of Sweden. The agreement will also see the building of a €55 million LNG terminal to neighbour the refinery.

In addition to the terminal, the companies will build a truck loading facility to enable the distribution of LNG throughout Sweden. A statement for Skangass also says that the terminal will act as a hub for LNG delivery to ships.

Skangass will use its LNG carrier Coral Energy to deliver the gas to the refinery. The carrier is currently under construction in Germany.

Under the agreement, Skangass will deliver a total of 20,000 tonnes of liquefied natural gas a year to the refinery in Lysekil in Sweden, with natural gas replacing butane and naphtha as the feedstocks to the refinery's steam reformer. Skangass says the change will reduce the refinery's CO2 output by 130,000 tonnes a year.

"The new LNG terminal in Lysekil is of great strategic importance for Skangass," CEO of Skangass Bjørn Torkildsen said. "In addition to deliveries to Preem, the terminal will open up new market segments and strengthen our position in the Swedish market."

The terminal is expected to be in operation by the end of 2013.