Swiss utility in talks to buy LNG from Canada's Goldboro project (updated)
16/08/2018 19:08
(Adds interview with Pieridae Energy CEO)
By Sabina Zawadzki and Rod Nickel
LONDON/WINNIPEG, Manitoba, Aug 16 (Reuters) - Axpo, a Swiss
utility and energy trader, said on Thursday it was in talks for
a 10-year supply deal with a Canadian company planning to build
a liquefied natural gas (LNG) terminal.
A sales and purchase agreement would boost the chances that
Pieridae Energy PEA.V would decide to build the C$10 billion
($7.6 billion) Goldboro project, which would be the first LNG
export terminal on Canada's East Coast.
Canada is rich in oil and gas but has yet to export major
shipments of LNG to Asia from its West Coast or across the
Atlantic from its East Coast.
"Under the term sheet with Pieridae Energy, Axpo will
purchase LNG from Train 2 of the Goldboro liquefaction facility
and sell it across Europe," Axpo said in a statement.
Deliveries are estimated to begin in the third quarter of
2023.
The Axpo deal is ready to be finalized once Pieridae secures
gas supplies from Eastern Canada and the northeastern United
States, hopefully within five months, said Chief Executive
Alfred Sorensen in an interview.
Sorensen declined to identify the size of the Axpo supply
agreement. Pieridae already has a 20-year agreement to sell five
million tonnes annually to German utility Uniper.
Goldboro would produce 10 million tonnes annually starting
in 2023 if construction begins by year-end.
Securing financing for such a large project, mainly through
offtakes, is a big challenge, however, for a company with a
C$195 million market cap.
"Are we delusional about how we can get to the finish line?
It really has been from the very beginning about how we can work
with the Germans and work to improve their energy security,"
Sorensen said.
Germany depends heavily on gas imports from Russia and is
seeking to diversify its suppliers. Pieridae is finalizing a
loan guarantee of at least $3 billion from the German
government.
The company is "very close" to securing enough committed
sales to make a positive final investment decision, he said.
Pieridae is also in talks to acquire an undisclosed Alberta
gas producer to supply Goldboro, he said.
Five other projects on Canada's East Coast have been
proposed although initiatives have sputtered in recent years
when global LNG prices fell.
Another handful of projects have been proposed for Canada's
West Coast, where LNG would be exported to Asia.
One of the largest is LNG Canada, a proposed C$40 billion
export terminal in Kitimat, British Columbia. A decision whether
to proceed with that project is expected by year-end.
LNG Canada is a joint venture led by Anglo-Dutch giant Royal
Dutch Shell Plc.
($1 = 1.3126 Canadian dollars)
(Reporting by Sabina Zawadzki in London, Rod Nickel in
Winnipeg, Manitoba and Julie Gordon in Vancouver; Editing by
Elaine Hardcastle and Phil Berlowitz)
((sabina.zawadzki@thomsonreuters.com; +44 207 542 4051;))