Gasol Aims to Develop LNG Market in West Africa

Prior to commercialisation of its own gas resources, Gasol aims to develop gas markets in West Africa through liquefied natural gas import projects.

These projects involve Gasol acquiring LNG and arranging for it to be shipped to a target market where it can be stored and regasified in Floating Storage and Regasification Units. The regasified gas can then be delivered to the West Africa Gas Pipeline for use in West Africa or delivered directly to power plants.

AfGen has had extensive negotiations on potential projects in West Africa and elsewhere, and is in advanced discussions on three LNG import projects in the region. The agreement signed today gives Gasol the option to access an existing project pipeline as opposed to developing its own projects from scratch.

Gasol has entered into the Option Agreement with AfGen and Afgas, a substantial shareholder of the Company, to purchase the entire issued share capital of AfGen (the ‘Option’). The Option expires 12 months after the signature of the Option Agreement. Entry into the Option Agreement is at no cost to Gasol. The cost of exercising the Option will be 75% of fair value, as determined by third party experts at the time of exercise, and will be settled through the issuance of Gasol shares.

As part of the Option Agreement, Gasol has agreed to fund AfGen’s working capital budget; provided that unless agreed by Gasol, Gasol shall not be required to lend in excess of  US$500,000 in any calendar month or US$5,000,000 in aggregate. The loan shall carry interest at the rate of 10% per annum calculated from the date of disbursement to the date of repayment. The interest shall accrue and shall be capitalised annually to form part of the loan. The loan shall be repayable on demand by Gasol and shall automatically and immediately become repayable in full (together with all accrued but unpaid interest thereon) upon the Option lapsing. Repayment of the loan is guaranteed by Afgas. The provision of the loan is a related party transaction, pursuant to Rule 13 of the AIM Rules for Companies.

The Directors of Gasol consider, having consulted with Panmure Gordon (UK) Limited, Gasol’s Nominated Adviser, that the terms of the Transaction are fair and reasonable insofar as shareholders are concerned.

Commenting on the agreement Gasol’s Chief Operating Officer, Alan Buxton, said: “This is an exciting first step in the delivery of the Company’s strategy, which was outlined earlier in the year. Today’s agreement will potentially enable us to generate substantial future revenues that will support Gasol’s further corporate development.”

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LNG World News Staff, August 29, 2012; Image: Gasol