NI Lender Gets Option to Buy into Storage Venture
InfraStrata, the lead developer of a gas storage project at Islandmagee in Northern Ireland (NI), said August 19 it has repaid a €1.8mn loan provided by Baron Oil. Both firms are UK-listed. The funds were used to bridge the receipt of an EU grant, the bulk of which was received in May.
Baron had an accompanying option to convert the loan balance into a 15% equity in Islandmagee, which would be provided pro rata by InfraStrata (65%) and its project partner NI's regulated gas and power grid operator Mutual Energy (35%).
The amendment to the agreement means the option is extended until March 31 2017, even though the loan was repaid effective August 1 2016.
Islandmagee’s planned working gas storage capacity is 500mn m³. The capital cost is estimated at £300mn by InfraStrata whose CEO Andrew Hindle said a final investment decision is targeted for 2017.
Islandmagee salt core rig (Photo credit: InfraStrata)
Baron Oil said August 19 that the option, as amended, enables it to acquire the 15% for £1.5mn. Its CEO Malcolm Butler said the option extension would give it “more time to assess progress on the Islandmagee storage project as the situation in the field unfolds, keeping an eye on the impact the closure of the Rough gas storage facility in the UK North Sea may have on gas prices in the UK.
Islandmagee is hoping for further EU grants, during its construction phase, but these are no longer guaranteed following the June 22 UK vote to leave the EU, because NI is part of the UK.