Ørsted AS on Dec. 18 signed an agreement to divest its LNG assets, a business the Danish energy company said had been “loss-making.”
Multinational trading house Glencore Plc agreed to acquire the LNG business, which Ørsted said had performed well during the last few years but has been “loss-making and is projected to remain so for years to come.”
Ørsted added that financial improvements to its LNG business would require further contractual commitments, something that would not fit into the company’s strategy to focus on expanding its renewable energy business.
The company, currently the world’s biggest offshore wind farm developer, had entered the LNG business in December 2007 through a long-term agreement with the Dutch LNG regasification terminal Gate in Rotterdam regarding the right to use 3 billion cubic meters of annual regasification capacity from 2011 to 2031.
Today, Ørsted’s LNG business consists of the long-term regasification capacity agreement with the Gate terminal in Rotterdam and five LNG purchase agreements.
The divestiture of its LNG business is projected to have a positive impact on Ørsted’s EBITDA from 2020 onwards, according to the company release.
The transaction is expected to close summer 2020. Terms were not disclosed.
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