Dutch firm to buy $38 million stake in Elengy Terminal

KARACHI: Royal Vopak, the world’s leading tank storage firm, said on Friday it would buy 29 percent stake in the Pakistan’s first liquefied natural gas import facility in a deal valuing an estimated $38 million.

Engro Corporation Ltd and Royal Vopak of the Netherlands announced the signing of a share purchase agreement in which Vopak will acquire a 29 percent share in Elengy Terminal Pakistan Ltd (ETPL), which has been in operation since 2015 and is the first LNG import facility in the country.

Vopak, in a statement, said the closing is anticipated to take place in the fourth quarter of 2018.

Engro Corp. said consummation of the proposed transaction in terms of the purchase agreement will be subject to “procuring inter alia all applicable regulatory and corporate consents”. “In terms of the share purchase agreement, the consideration payable by Vopak to ECORP (Engro) will be $38 million subject to certain adjustment mechanisms set out under the share purchase agreement,” Engro said in a statement to Pakistan Stock Exchange.

LNG imports are expected to climb fivefold to 30 million tons a year by 2022. Currently, two LNG terminals have combined re-gasification capacity of 1.2 billion cubic feet/day. Royal Vopak Chairman Eelco Hoekstra said the cooperation gives Vopak an entry into the growing LNG market.

“This fits very well our ambitions to grow and diversify our service offering in LNG.”

ETPL’s wholly owned subsidiary Engro Elengy Terminal (Pvt) Ltd (EETPL) owns an LNG facility which is located in Port Qasim, adjacent to the Engro Vopak chemical terminal on the mainland side of the channel into Port Qasim. The facility consists of an LNG jetty including a 7.5 kilometre high-pressure gas pipeline, which is connected to the grid of EETPL’s sole customer Sui Southern Gas Company Ltd.

EETPL holds a 15 year floating storage and regasification unit (FSRU) time charter. The liquefied gas is supplied, under long-term contracts, via LNG carriers from various exporting countries to the FSRU, which is moored to the Engro Elengy Terminal (Pvt) Ltd jetty and connected to its pipeline. The regasification takes place on the FSRU and the gas is transferred to the mainland where, under high pressure, it enters the grid of the customer.

Engro Corporation President Ghias Khan said the partnership will pave the way for Engro and Vopak to collaborate in further ventures at home and abroad using their combined resources and expertise. Vopak operates a global network of terminals located at strategic locations along major trade routes.

Brokerage Topline Securities said Engro has 80 percent stake in ETPL at a book value of Rs1.6 billion. “The gain will likely be recognised in company’s unconsolidated P&L (profit and loss) only as Engro is retaining controlling stake,” it said in a flash note.