(Alliance News) - Infrastrata PLC said Wednesday it has started the next stage of progressing the Islandmagee gas storage facility in Northern Ireland, with funding discussions and a refined construction strategy.
Shares in the natural gas storage provider were 9.6% lower at 0.62 pence on Wednesday.
Following the entry into a binding term sheet with Vitol SA, Infrastrata will draft and sign a gas storage agreement, that will be based on the binding pricing and capacity terms agreed in the term sheet signed in June.
The agreement will cover the whole capacity of the project, being 500 million cubic metres once all caverns are fully operational.
In June, energy trading firm Vitol signed the term sheet with InfraStrata's Islandmagee Energy Ltd subsidiary. Vitol will enter a 12-year exclusive gas storage agreement for offtake at the gas storage facility.
The term sheet has an initial term of 12 months, which can be extended by six months at a time thereafter.
In addition, Infrastrata has started discussions with potential equity and debt partners in the UK and Europe, for funding the construction of the project and pre-construction works.
Discussions include a proposal for a convertible debt facility that can be converted into equity at the project level. Within discussions, Infrastrata has provided the potential funding partners with additional financial modelling for the project, including construction costs and revenue sensitivities.
Following the receipt and analysis of all project construction offers, Infrastrata said it has changed its main construction strategy. The company's main focus will be to de-risk the project as much as possible during construction, and integrate various construction services as well as centralise the main requirements of the chosen contractors.
This refined strategy is expected to result in cost savings, operational efficiencies and a reduction in the impact on the local area within Islandmagee, which is on the coast north of Belfast.
Looking ahead, Infrastrata expects to obtain a final investment decision to fund project construction by the end of 2019, leading to first injection of gas in 2022 and full gas storage operations in 2023.
For the marine licence, the company has submitted all reports formerly requested by the Department for Agriculture, Environment and Rural Affairs in Northern Ireland, and expects feedback in due course.
"We are now at a very exciting stage of the Islandmagee Gas Storage Project. Having underpinned our future revenues with an innovative offtake structure, we have been able to fully model the future income streams for the next 12 years. This has assisted in our negotiations with potential project funding partners. As we did with the term sheet with Vitol, we will take the required time to negotiate the best long-term deal we can so as to ensure our long term interests and those of our shareholders are protected," said Chief Executive Officer John Wood.