MADRID (Reuters) - Spanish oil company Repsol REP.MC is seeking partners to invest $4 billion to export natural gas from North America to Europe, which is looking to cut its dependence on supplies from Russia, two sources familiar with the matter said.
Repsol aims to build the plant with a planned annual capacity of 5 million metric tonnes of liquid natural gas (LNG) at its Canaport terminal on the east coast of Canada in New Brunswick to meet Europe’s growing demands for cheap and dependable gas, one of the sources said on Tuesday.
The new plant would ship shale gas from the United States, the sources said, without giving further details.
“The idea is to take advantage of the Canaport site to export gas to Europe at a time when it is looking for safer and more competitive supply sources,” said the source, adding that Repsol would be a minority partner.
“This will only be done if there are partners who want to take on the bulk of the investment,” said the source who is involved in the project.
Repsol said it has taken steps to study the viability of the project, but did not give further details.
Canada wants to become a major exporter of natural gas and crude oil to challenge the more established industry in the Gulf of Mexico in the United States.
British Columbia on Canada’s west coast has cut taxes for LNG to encourage oil companies, such as Petronas, Shell and Chevron, to build capacity to ship Canadian gas to Asian markets.
The project may attract large European utility companies interested in diversifying away from Russia, where tensions with Moscow and its conflict with Ukraine have heightened concerns about the security of energy supplies to Europe.
The EU relies on Russia for about a third of its oil and gas and some 40 percent of that as is shipped through Ukraine.
Repsol owns 75 percent of Canaport and Canada’s Irving Oil 25 percent. Irving Oil has said Canaport is the closest North American port to Europe, India and South America.
The plant was built to turn LNG received by tanker back into its gaseous form and sends the gas by pipeline into Canadian and U.S. markets, but the shale boom in the United States has meant it is now underused.
Repsol has written down a total of 1.4 billion euros ($1.74 billion) against the value of the plant, where production fell 40 percent in 2013 from a year earlier as the United States reduced its natural gas imports.
Reporting by Jose Elias Rodriguez; Writing by Tracy Rucinski; Editing by Louise Heavens