El Paso comes in from the cold
Since April 1980, El Paso Co., has been losing $7 million/month as a result of Algeria's decision to stop delivering contracted LNG supplies. On Feb. 18, 1981, after 10 months of negotiations involving both US Department of Energy and Department of State representatives, the talks were called off; 2 days later, El Paso announced that it was writing off most of its equity in the last six LNG tankers serving the project. The charge against El Paso's 1980 earnings amounted to $365.4 million. Throughout the negotiations, US policy objectives were as sharply defined as Algeria's - a refusal to accept LNG price parity with crude oil. At $6/million Btu f.o.b. Algeria, plus transportation and storage charges, the LNG would have entered the US pipeline system at almost $8/million Btu. El Paso's unfortunate financial experience has cast a shadow over LNG's prospects. In the long run, however, the US will need LNG to close the gap between domestic production and the demand projected for the 1990s.
- OSTI ID:
- 5943650
- Journal Information:
- Fortune; (United States), Journal Name: Fortune; (United States) Vol. 103; ISSN FORTA
- Country of Publication:
- United States
- Language:
- English
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