Eurogas Corporation (Eurogas) has entered into an agreement with ACS Group and Enagas that will significantly advance the Castor Underground Gas Storage (UGS) Project in Spain.

At the commencement of the agreement, ACS will increase its ownership in Escal UGS S.L. (the Spanish operating company) from 5% to 66.67%. Castor Limited Partnership (CLP), of which Eurogas is a 73.7% owner, will own 33.33%.

At the latest of the start-up of the UGS facility, ACS will sell and Enagas will buy 50% of ACS 66.67% equity on a pre-established pricing formula at which point CLP, ACS and Enagas will each own 33.33%.

For a period of 180 days after start-up of the UGS facility CLP can sell part or all of its shares to ACS and Enagas priced on the same basis as ACS sale to Enagas.

25 days after the receipt of the concession, ACS shall pay to CLP prior investments in the Castor UGS project of approximately Canadian $43.5 MM (30 MM euros), of which approximately Canadian $41MM will be received by Eurogas.

ACS shall be responsible for the funding of the project including providing all guarantees required, from the day it becomes a shareholder through to the inclusion of Castor UGS into the Gas System. Projected total investment is now estimated at over 1.2 billion euros. CLP will not be required to put any equity funds or provide any warranties required by project finance lenders or for any bridge financing.

There will be a tag along right for CLP should ACS sell a certain portion of their shares in Escal.

Until inclusion of the Castor UGS facility in the Gas System, the board of Escal will have 9 directors, allocated as follows: ACS 6; CLP 2; Enagas 1. After completion and inclusion into the Gas System each party will be allocated seats on a proportionate basis.

ACS Group is the largest construction group in Spain and third largest in the world, with revenues in excess of 20 billion euros. ACS Group is a global leader in the creation, construction and operation of infrastructure in a variety of industrial sectors such as: oil & gas, LNG and regasification, power generation, grids and railways. Through its subsidiaries, such as Dragados Off-Shore, it is one of the world leaders in the construction and installation of off-shore platforms and infrastructure topsides.

Enagas is Spain's top natural gas transportation, regasification and storage company, and also is the Technical Manager of the Gas System. Its facilities include over 7,600 km. of high-pressure gas pipeline and three regasification plants, which have a total storage capacity of 1.3 million cubic meters of GNL. It also manages two underground gas storage facilities, Gaviota and Serrablo, and has recently been awarded an concession for the exploitation of the Yela onshore gas storage.

Tags: Eurogas Corporation