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FERC Approves Waiver on Tying, Capacity Release Arrangements Between Statoil and Sonatrach at Cove Point LNG

Yesterday FERC granted a waiver of  its prohibition on tying and certain capacity release requirements sought by Statoil Natural Gas LLC and Sonatrach. The parties sought the waiver to allow a release to Sonatrach of Statoil’s open access transportation
September 15, 2009

Yesterday FERC granted a waiver of  its prohibition on tying and certain capacity release requirements sought by Statoil Natural Gas LLC and Sonatrach. The parties sought the waiver to allow a release to Sonatrach of Statoil’s open access transportation capacity on the Cove Point sendout pipeline to be tied or linked to a purchase and sale agreement whereby Sonatrach would sell LNG to Statoil at the inlet of the Cove Point terminal, Statoil would store and regasify it and sell it back to Sonatrach at the outlet of the terminal. FERC previously had expressed concern about granting waivers for similar types of arrangements due to, among other things, uncertainties regarding effects on open access competition. In this case, FERC found no negative effects and emphasized that the “Statoil-Sonatrach transaction will provide significant benefits in terms of bringing new supplies to the United States.” FERC’s order is in the eLibrary under Docket No. RP09-820.

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