The Government and Shell have signed an agreement for the supply of liquefied natural gas (LNG) for use in power generation in Gibraltar.

This agreement includes the construction of a small regasification unit that will receive, store and re-gasify the LNG arriving by ship for use in Gibraltar’s adjacent gas-fired power plant, which is already under construction.

The regasification unit will be operated by Gasnor, a 100% Shell-owned subsidiary with over ten years of operational experience in LNG for marine and small scale LNG in North Western Europe. The LNG will be stored before being warmed up to its original gaseous state and then piped to the power plant. The unit will also include a berth for a small LNG carrier that will supply the LNG at night, minimising disruption to the neighbouring port, airport and housing estates. There is also potential for LNG bunkering operations in the future, following the appropriate environmental assessments and safeguards.

The Chief Minister, the Hon Fabian Picardo QC said: “My Government is delighted with this major step forward in the provision of LNG, the best option for an environmentally-friendly and safe solution for guaranteed power generation. Shell, a world leader in this field has been our preferred bidder for a long time and we are confident that their plans conform to standard, best- in-class practices in project development. This important project is one for Gibraltar to be proud of and which I am very pleased to see now starting construction. This is a massive advance also in respect of guaranteeing the integrity and security of electrical supply for Gibraltar for the next thirty years which is hugely important for our modern tech industries, for all our businesses and for every residential consumer also. This excellent project will sit alongside our continued commitment to the introduction of other sources of renewable energy. A proud day indeed for Her Majesty's Government of Gibraltar and for the people of Gibraltar.”

Maarten Wetselaar, Director of Shell Integrated Gas said on Friday; “With today’s signing, Gibraltar has led by example and put itself at the forefront of a cleaner, flexible energy system that will reliably and consistently deliver power to the people of Gibraltar. This project will draw on Shell’s combined expertise across 50 years of excellence in innovation, technology and safety. It proves once again that small-scale projects can deliver big benefits and bring more clean-burning gas to the markets that want it.”

Following the recent approval of a robust Environmental Impact Assessment report, construction of the regasification unit is planned to start towards the end of 2016 with commissioning and first delivery of LNG expected to take place ahead of the start-up of the power plant, expected during the second half of 2017.