As the best bidder in an international bidder competition for the German Federal Republicâs caverns at Etzel near Wilhelmshaven, IVG has won the competition. The cavern complex comprises 33 caverns for storage of crude oil and natural gas. These caverns are subterranean cavities in the Etzel salt mines, providing an environmentally-friendly and safe storage facility for large volumes of natural gas and crude oil. The caverns are approximately 1,000 metres below the earthâs surface with an average volume of 500,000 mÂ³, the same capacity as a supertanker. IVG set up the complex in the 1970s and, since then, has managed them in trust for the Federal government.
Long-term contracts with tenants with high credit ratings
Together with its own seven caverns with long-term rental arrangements, IVG thus has 9 gas and 31 oil caverns at this location. The oil caverns contain parts of the legally specified strategic reserves held by the organisations for crude oil stocks of the Federal Republic of Germany, the Netherlands and Portugal. There is also a long-term contract with the Etzel Gas Store Group, the majority shareholders of which are E.ON Ruhrgas AG and the Norwegian Statoil, which enables use of the gas caverns. The first class credit rating of the tenants means that the transaction can be financed favourably.
"The cavern business is carried out on a long-term basis and with customers who have first class credit rating. It is therefore a perfect addition to the IVG portfolio.
German Federal Republicâs caverns at Etzel near Wilhelmshaven
Right from the beginning, the acquisition makes a positive contribution to the Groupâs net income", said Bernd Kottmann, member of the Board of Directors for portfolio management, of this addition to the logistics properties business area.
Etzel: energy hub with growth potential
The complex in Etzel is connected to the most important international natural gas pipeline systems and is now already an energy hub for imported natural gas and crude oil. The oil pipelines lead to the refinery centres of Hamburg and Rhine-Ruhr. The gas pipelines connect the location with the Western European natural gas alliance. With regard to the growing demand for gas in the future, the Federal government has kept 14 of its 24 oil caverns unleased at the disposal of the purchaser. These are available in the short term for conversion to gas storage and rental.
As a result of the extensive salt rights acquired in the 1980s, IVG can at least double the cavern capacity at this location in the future. IVG expects this offer to be accepted in the short term in view of the worldwide increase in demand for energy and raw materials and the expected price fluctuations. In the past, IVG has generated stable and long-term cash flow revenues of well over 10% p.a. with the cavern business.
The acquisition is still subject to the approval of the German anti-trust commission and is expected to take place with economic effect from 01 April 2005.
Source: IVG Immobilien