Spain approves 1.4 bln euros compensation for shutting gas plant

Fri Oct 3, 2014 12:07pm EDT
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* Group of banks agree 30-year loan to finance payment

* Banks include Santander, Caixa, Bankia - sources

* Enagas to hibernate plant, play role in financing

By Andrés González

MADRID, Oct 3 (Reuters) - The Spanish government approved payment of 1.4 billion euros($1.75 billion) in compensation to the owners of offshore gas facility Castor, built to store 30 percent of Spain's daily gas consumption and shut last year after minor earthquakes in the area.

The compensation will be paid to Escal, a joint venture owned 66 percent by Spanish builder ACS and 33 percent by Canada's Dundee Energy. The venture will be dissolved after receiving the payment.

The payment will be financed by a loan from a group of Spanish banks, which will then be paid by gas companies and consumers over a 30-year period.

As part of the agreement, Spanish gas grid operator Enagas will act as financial intermediary and oversee the hibernation of the plant, the government said.

Spanish authorities ordered a halt to injections of gas at Castor, built by concession holder Escal, last autumn after more than 200 minor earthquakes near the area in eastern Castellon, off the Mediterranean coast.   Continued...