Melrose updates Galata gas storage plans

In late 2007 Melrose signed a Memorandum of Understanding with Bulgargaz Holding, the Bulgarian state-owned gas utility company, under which the two companies conducted a joint feasibility study to evaluate the conversion of the Melrose operated Galata gas field into a gas storage facility.

Offshore staff

LONDON -- In late 2007 Melrose signed a Memorandum of Understanding with Bulgargaz Holding, the Bulgarian state-owned gas utility company, under which the two companies conducted a joint feasibility study to evaluate the conversion of the Melrose operated Galata gas field into a gas storage facility.

The study concluded positively and plans are being brought forward to convert the field to gas storage with first injection beginning in 3Q 2009, the companies say. The storage capacity will be developed in phases over a three-year period with a total capital expenditure of $90 million being required to create usable storage capacity of 1.8 bcm.

Melrose and Bulgargaz now plan to enter into a second agreement under which Bulgargaz has the right to become an equity partner in the Galata gas storage project and acquire up to a 40% working interest by contributing its proportionate share of the capital costs and cushion gas requirements. It is expected that Bulgargaz will acquire this interest when first gas injection begins.

12/01/2008

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