ERG Says Decided To Exit Shell Joint Venture Sicily LNG Project

By Liam Moloney

ROME--ERG SpA (ERG.MI), one of Italy's biggest independent refineries, Monday said it will pull out of the still-to-be-built Sicilian liquefied natural gas project as the demand for the fossil fuel has dropped following the economic slowdown in Europe.

In a statement, ERG said the board of directors had decided to exit the equally owned joint venture project with Royal Dutch Shell PLC (RDSA). The Sicilian regasification terminal project had an annual capacity of 8 billion cubic meters, or about 10% of Italy's demand.

The project is still waiting for final approval from the Sicilian region.

"The decision to withdraw from the project stems from the profound changes that have occurred in both the energy and the economic and financial scenarios, following the recession that began in 2008," it said.

Industry Minister Corrado Passera has envisioned turning Italy into a gas hub with new LNG import terminals and pipelines in the country supplying the fossil fuel to other European countries.

Write to Liam Moloney at [e-mail]

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