PTG Portland Gas

    RNS Number : 4544H
  Portland Gas plc
  05 November 2008
   

    


 For Immediate Release  5 November 2008 


    PRESS RELEASE

    Portland Project Update


    The Directors of Portland Gas plc (AIM: PTG) ("the Company" or "Portland Gas") the independent gas storage company provide the following
update on the funding of the Portland Project.

    The Directors have decided in these very challenging market conditions to suspend the current joint venture funding process as they
believe it would not result in acceptable terms being reached for the Company and its shareholders. 

    A consequence of the suspension of the joint venture funding process is that the target date for first gas has been revised to end Q1
2012 (from Q3/Q4 2011), but achievement of full capacity is still anticipated for the winter of 2015. In order to achieve these target dates
the project will require approximately �12million of further funding in Q1 2009 followed by a significant further tranche, or full project
funding, by the end of 2009. The Company is continuing discussions with several parties regarding securing the first part of this funding
requirement with a strategic partner.

    Commenting on the decision, Andrew Hindle, the CEO of Portland Gas, said: 

    "The Directors remain committed to full development of the Portland Project and are committing �2.5million from existing cash reserves
to continue with the development work for the project through to the end of Q1 2009. The Portland gas storage facility is recognised as of
National importance and could be providing 5% of the UK peak daily gas demand in the latter part of the next decade. 

    "During the funding process Portland Gas recognised that the prices generally being paid for gas storage assets in the market had
declined, and therefore to retain its target of at least a 50% interest in the Portland Project alongside new joint venture partners it
would be necessary for it to make a debt and equity contribution to the project. The global "credit crunch" has all but closed off the
likelihood of achieving this target for the time being and this factor, combined with cut-backs in longer-term capex spend by industry
participants in the sector, has meant that halting the current joint venture funding process is in the best interests of all shareholders. 

    "We anticipate that market conditions will improve in 2009 and we are continuing discussions with parties who have expressed an interest
in investing in the Portland Project. Following a period of significant cost inflation over the past few years in the oil and gas sector,
the Company anticipates that the recent reduction in commodity prices will feed through next year into a reduced estimated cost of
construction for the Portland Project. However, as the board remains firmly committed to achieving fair long-term value for shareholders, we
are prepared to suspend the project in 2009, if necessary, until acceptable terms for further funding are available."


    For further information please contact:

    Portland Gas plc

 Andrew Hindle, Chief Executive Officer          020 8332 1200
 Craig Gouws, Chief Financial Officer

 PR - Watershed

 Sara Hudston                                    01308 420785

 Investor Relations - Buchanan Communications    020 7466 5000
 Ben Willey

 Nominated Advisor and Broker - Seymour Pierce   020 7107 8000


 Jonathan Wright 
 Sarah Jacobs
 Richard Redmayne




    Notes to Editors:

    Background on Portland Gas 

    Portland Gas' business focuses on the development of gas storage projects and associated infrastructure in the United Kingdom and
internationally. It currently has two projects in its portfolio, the first on Portland, which will be the largest onshore gas storage
facility in the UK, for which planning permission was granted by Dorset County Council in May 2008 and Pipeline Construction Authorisation
was granted by the BERR (now known as the Department of Energy and Climate Change) in July 2008. The second project is at Larne Lough in
Northern Ireland and the Company is progressing further new venture projects in Europe. The two projects which could between them provide up
to 10% of the total UK and Ireland peak daily demand in the latter part of the next decade. 

    Further information is available on the Company's website www.portland-gas.com. The company is one of only a few in Europe focused
specifically on gas storage development, a sector with significant growth potential in Europe over the coming decades.




This information is provided by RNS
The company news service from the London Stock Exchange
 
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