Danish energy major Ørsted A/S has announced that it has signed an agreement to divest its liquefied natural gas (LNG) business to the oil division of the global natural resources company Glencore plc.
In December 2007, Ørsted entered into a long-term agreement with the Dutch LNG regasification terminal Gate in Rotterdam, the Netherlands regarding the right to use 3 billion m3 of annual regasification capacity from 2011 to 2031.
According to the company, its current LNG business consists of the long-term regasification capacity agreement with the Gate terminal in Rotterdam and five LNG purchase agreements. Even though Ørsted’s LNG team has performed well during the last few years, the business has been loss-making and is projected to remain so for years to come. Further financial improvements would require further contractual commitments.
With Ørsted’s global expansion in renewable energy, it is clear that LNG trading will not be a part of the company’s future core business, and therefore being divested.
The transaction entails a payment from Ørsted to Glencore and will result in a loss that exceeds the current provision related to the LNG activities. Completion of the transaction is dependent on the fulfilment of a number of conditions and is expected to take place in the summer of 2020.
