Grid plans £335m LNG expansion

National Grid Transco (NGT) is to invest £355m to triple the capacity of its Liquefied Natural Gas (LNG) importation ship terminal in Kent.

National Grid Transco (NGT) is to invest £355m to triple the capacity of its Liquefied Natural Gas (LNG) importation ship terminal in Kent.

The move is a response to the changing gas needs of the UK, as it moves to being a net importer of the fuel, from years when it was an exporter of natural gas.

NGT announced a £130m investment at the Kent site, on the Isle of Grain, in 2003. That was the first phase of converting the site into a LNG importation facility, to enable LNG tankers to berth, unload and store LNG, before its regasification and delivery into the UK's national transmission system. It will come on stream this spring, representing about 4 per cent of the UK's annual gas demand.

The new investment will increase the facility's capacity to import and process LNG from 3.3 million tonnes per year to 9.8 million tonnes per year. This second phase of development will represent about 12 per cent of the UK's annual gas demand, and is expected to start operations in late 2008. The additional investment in Grain LNG is underpinned by 20-year contracts signed with Centrica, Gaz de France and Sonatrach for the additional capacity.

Edward Astle, the director of NGT's non-regulated businesses, said: "As Britain moves progressively from being an exporter to a significant importer of natural gas, it is vital that the infrastructure is in place to meet the nation's gas requirements. This will triple Grain's capacity and help ensure liquefied natural gas can play its full part in meeting Britain's future energy needs, as well as diversifying the source of gas supplies for the country."

Britain's annual gas demand is projected to increase by at least 15 per cent over the next 10 years. As production from North Sea gas fields declines, dependence on gas imports is forecast to approach 46 per cent by 2010.