4Gas Takes Legal Action after French Government Halts Pegaz LNG Project

Rotterdam, 23 November 2009

As a significant part of the energy consumed in France is natural gas and as the resources of the Lacq deposit are running out, the operators in the sector and the port authorities quickly saw that the preservation of diversified natural gas resources required the construction of liquefied natural gas terminals in France. Le Havre, Dunkirk and Fos-sur-Mer are examples showing that the French ports have a comprehensive understanding of current energy needs.

In this regard, the Port of Le Verdon situated in the district of Verdon-sur-Mer near Bordeaux, was chosen as one of the sites for building a natural gas terminal in the South West region of France, in the absence of any port of entry for gas in the region.

This site was considered suitable by 4GAS BV, a Dutch company that has extensive experience in this field. It is already managing – or is developing – five natural gas terminals throughout the world, in particular the one in Milford Haven in Wales that has been operational since August of this year. In this context, on 4 August 2006 4GAS concluded a reservation agreement with the Port of Bordeaux for the construction of a natural liquefied gas terminal. The purpose of this agreement was to allow the company to obtain the necessary environmental, planning and industrial permits.

4GAS and the Port worked together for nearly three years to bring this large-scale project to a successful conclusion with the full agreement of the Government authorities. In particular, they collaborated in the public debate that took place in 2007 – at the end of which 4GAS decided voluntarily to accept the recommendations, that were not compulsory, arising from the public Debate and to modify its plan for the natural gas terminal – and they joined together in defence against appeals lodged by opponents of the terminal project. In addition, the Strategic Project adopted in April 2009 by the Port, and voted for without any opposition from the Government, made the natural gas terminal a structural element of the industrial development of Verdon Port.

Apart from the Port authorities – the Supervisory Board and the Board of Directors and ministers in Paris – the city of Bordeaux and the urban district, the most important local public leaders, were also in favour of the terminal project. This was because the project met a regional and national energy need and a direct and indirect industrial and labour requirement – taking account of the number of jobs created (about 500 during the construction of the terminal and about 200 during the operation thereof).

However, after three years of joint effort by everyone, a sudden and unexpected change took place in the Government administration in July. The latter decided to halt the project and force the port authorities to renege on a previous decision allowing the agreement to be extended under the contractual stipulations.

Although it regards this decision as unlawful because it has in fact been made by authorities that cannot act as a substitute for the Port in making decisions that can only be taken by the latter, 4GAS cannot ignore the practical effect of this decision: that it is now impossible to build the natural gas terminal. By refusing an extension to the agreement with the company, the public authorities have, without regard to any lawful framework, prohibited the company from continuing its project even though transparency in the decision-making process is essential for investments that amount to about €800 million. The political and legal environment is an essential criterion in the choice of country for making investments of this size and clearly in this regard France has just sent out a strong signal to international industrial operators.

Whilst 4GAS remains persuaded of the economic interest in building a natural gas terminal on the Bordeaux Port site, it is also convinced that in France it is not possible to overcome the rejection clearly manifested by the central government authorities, even though it is only the port authorities that have sole jurisdiction.

As a result of the refusal of the Port and the Government to go back on their decision, the company has decided to take legal action under French law to recover the amounts it has spent. These are substantial amounts of money spent on carrying out technical, legal and, in particular, environmental studies allowing the company to obtain the permits required to build and operate the gas terminal. The company is also – also under the principles of French law – seeking compensation for loss of earnings resulting from having to abandon such a substantial project.

However, 4GAS is refraining from engaging in any public debate with the political authorities of the numerous States in which it carries on business and has a policy of not commenting on any legal proceedings to which it is a party. It therefore intends in the future to keep this attitude of reserve throughout the proceedings currently taking place before the Bordeaux Administrative Court.

About 4Gas
4Gas is an independent company dedicated to developing and operating LNG import, regasification and storage terminals around the world. It is the world’s only independent company with a sole focus on LNG and a global footprint. Current 4Gas projects include Dragon LNG in Milford Haven, Wales; the LionGas project in Rotterdam, The Netherlands; the MapleLNG project at Nova Scotia, Canada; the Vista del Sol project in Corpus Christi, Texas, USA and the Mashal LNG project near Karachi, Pakistan.

4Gas has offices in Rotterdam (HQ), Houston, Halifax, Paris, Bordeaux, Milford Haven and Karachi. 
For further information visit: www.4Gas.com

The Carlyle Group and Riverstone Holdings, LLC have a controlling interest in 4Gas.
For more information on Carlyle/Riverstone, visit www.carlyle.com
 
For additional information on 4Gas and Pegaz, pease contact Henk Jonkman via 4Gas' Rotterdam office, tel. +31 (0)10 24 26 000.