Danish renewable energy utility Orsted is taking a further step to divest its previously far-reaching fossil fuel sector activities, and will now also shed its liquefied natural gas (LNG) business.
The global offshore wind champion is actually paying natural resources company Glencore to take over a long-term regasification capacity agreement with the Gate terminal in Rotterdam as well as five LNG purchase agreements.
The LNG business has been loss-making and is projected to remain so for years to come, Orsted said, adding that the divestment will result in a loss that exceeds its current provision related to the LNG activities.
Orsted didn’t reveal how much it will pay Glencore, but said the transaction will have a positive impact on EBITDA earnings before interest, taxes, depreciation and amortisation) from 2020 onwards.
The company in 2017 had already divested its formerly large oil and gas upstream operations, and changed its name from Danish Oil & Natural Gas (DONG) to Orsted to reflect the transformation into a green energy company.
With Orsted’s global expansion in renewable energy, it is clear that LNG trading will not be a part of its future core business, and is therefore being divested, the utility esplained in a release.
Completion of the transaction with Glencore is dependent on the fulfilment of a number of conditions and is expected to take place in the summer of 2020.
Orsted in December 20018 had first entered into a long-term agreement with the Dutch LNG regasification terminal in Rotterdam regarding the right to use 3 billion cubic metres of annual regasification capacity from 2011 to 2031.