AES Panama LNG

completed

AES Corporation (“AES Corp” or the “Sponsor”) through its indirect ownership interest in each of Gas Natural Atlántico the (“company” or “GNA”) and Costa Norte LNG Terminal (“Costa Norte”), is developing a project that comprises the development, construction, operation and maintenance of an integrated gas to power project consisting of: (a) a 380MW combined cycle gas turbine (“CCGT”) power plant, and (b) an onshore liquefied natural gas (“LNG”) import terminal with a 180,000 m3 storage tank (approximately 80 TBTUs. It is anticipated that the project will begin construction by April 2016. Project cost for both the Plant and the Terminal are estimated at $1.1 billion which the company expects to finance with both debt (approximately 55%) and Sponsor equity (45%). IFC is proposing to provide up to US$150 million in the form of an IFC A Loan. The combined cycle of 3 units of gas and steam is to be supported by a heat recovery system. The produced energy will be delivered to the Costa Norte substation as per established on the Power Purchase Agreement. The LNG Terminal will include a new berth for LNG ships and one above ground storage tank with 180,000 m3 of capacity. The terminal has been sized to accommodate LNG vessels up to 180,000m3 which more than covers the gas supply requirement of the plant. The three main functions of the terminal and associated system include: (a) download of the LNG on a pier parallel to the coast ("Jetty") and cryogenic pipes up to storage tank (through which gas will be transported at temperatures minus 160 degrees centigrade); (b) LNG storage in the storage tank; (c) regasification and onshore gas delivery to the power plant.The plant and the terminal will be built on a 20-hectare site, located in an industrial area near the Atlantic entrance of the Panama Canal in Telfer Island, in the province of Colon (approximately 60km northwest of Panama City), leased to the company by the Panama Ports Company (PCC.) The project site borders to the North with the storage and fuel supply tanks and the pier of the Telfer Tanks Company. To the South it borders unused land forming part of the Panama Ports concession. To the East it borders with the road that ends in the Pier 16 and to the West with the entry of the Atlantic sector of the Panama Canal and Manzanillo Bay. As the project is located in the so-called “compatibility area” of the Panama Canal Authority (ACP) it needs to be compatible with ACP operations and requires the approval of ACP. This process evaluates the project from an operational stand point as well as potential environmental risks and impacts on ship traffic.The site offers good access to road transportation and the nearby Cristobal port and it is located in a zone designated for industrial activities with a limited population in the immediate vicinity.The socio-economic area of influence of the project includes the following populations: Cristóbal, Barrio Norte, Barrio Sur, Ciudad Arco Iris, Puerto Escondido or Urbanización El Esfuerzo and Margarita located at between 0.37 km and 4.0 km from the project site.The approach bay to the dock is located within the breakwater in the Atlantic sector of the Canal and adjoins to the West with the path used for all the ships that cross the Canal. The bathymetric studies conducted as part of the project reflect current water depth from 0.80 to 2.39 m in the jetty area, and some depths reaching 11m on the turning basin area. Thus to ensure the draft required by the LNG vessels and the FSU to access the dock, as part of the project, GNA will dredge (a) a navigation channel that connects with the navigation route of the Atlantic access of the Panama Canal, (b) a maneuvering area within the Manzanillo Bay and (c) a strip of access to the pier. The estimated dredging need varies from 2.6 to 3.5 million cubic meters, depending on the final agreement with the Panama Canal Authority (“ACP”) for the maneuvering operation. It is estimated that to reach the needed depth of 14m, approximately 3.5 million m3 of material will be removed within an approximately 62 ha area. The site selected for the disposal of the dredged material is located in Limon Bay to the East of the entrance of the Panama Canal, in an area of approximately 60.72 ha and a depth of 21 to 23 m. This site is located approximately 8.5 km from the project site and requires authorization from the Panama Marine Authority (AMP). The final disposal area for the dredged material is not within areas defined for fishery use, and according to the ACP Use Plan, it is designated as an area of anchorage for vessels awaiting passage through the Canal and has been used previously by the AMP for disposal of dredged material.