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Prumo to acquire Bolognesi LNG-based power project

16 Jun 2017 20:16 (+01:00 GMT)
Prumo to acquire Bolognesi LNG-based power project

Sao Paulo, 16 June (Argus) — Brazilian firm Prumo Logistica reached an agreement with Rio Grande do Sul-based Bolognesi Energia to acquire a 1,238MW thermoelectric project tied to LNG.

The value of the transaction was not disclosed. Prumo is controlled by private equity firm EIG Global Energy Partners.

Prumo said the deal includes the construction of the plant and the transfer of Bolognesi's 37 power purchase agreements (PPAs), which were awarded in a November 2014 power auction.

Prumo said it will seek authorization to transfer the project location from Pernambuco state to the Port of Acu, Rio de Janeiro state, where it plans to develop an LNG hub.

The Novo Tempo plant will use gas derived from LNG to be delivered into a planned floating storage and regasification unit (FSRU). The integrated project will require R3bn ($911mn) in capital investment.

In addition to Novo Tempo, Bolognesi won long-term PPAs for the 1,238MW Rio Grande project in southern Rio Grande do Sul state, which was not included in the deal with Prumo.

In February, Brazil's electricity regulator Aneel agreed to postpone the start date for both thermal plants after the company successfully renegotiated the PPAs with distributors. Both projects were initially scheduled to supply distributors from January 2019.

Aneel stipulated that Bolognesi has until the end of August to demonstrate the viability of the two projects, including secured financing and natural gas supply contracts. The company also needed to secure environmental permits by 31 December 2017, begin construction by August 2018 and begin test operations by October 2020.

Bolognesi has said it has an LNG supply contract with Shell. It also signed in May 2015 a €800mn ($900.4mn) turnkey contract with Spanish industrial group Duro Felguera and US industrial giant GE for both plants.

Prumo did not say whether these contracts will be maintained.

In 2015, Prumo and Bolognesi held preliminary discussions for a gas hub at Acu. Prumo is now moving ahead with the project on its own.