EDF and Dow announce LNG capacity sharing agreement

EDF Trading and Dow Chemicals yesterday announced a four-year agreement to share LNG regasification capacity at European and US terminals. The deal will give EDF Trading access to the Freeport LNG terminal in Texas , while D ow will have access to European terminals such as Zeebrugge in Belgium . The companies said the agreement would allow them to compete more effectively for supply while producers would be able to sell LNG based on the higher of US or European prices. "The rest of the world is competing for spot cargoes, LNG ships bound by contracts shorter than one year," said Dow LNG business director, Craig Barry. "With this agreement I can offer you access to the US and European markets. That makes me a more attractive buyer."

EDF, the parent company of EDF trading was given the go-ahead by the Port of Dunkirk to construct a LNG terminal at Dunkirk with a 6 Bcm/y capacity. The project is slated for completion in 2012 and would provide EDF with a central European supply hub.

The Freeport terminal is still in the commissioning process, but is expected to be ready for commercial operation next year. Dow pays Freeport LNG for exclusive rights to a portion of the terminal’s capacity. The Freeport terminal, like other Gulf Coast facilities, is expected to struggle to attract cargoes whilst Henry Hub remains relatively low and high Asia n demand means buyers there are prepared to outbid Henry Hub and other Atlantic basin prices to secure cargoes .