Centrica acquires Grain LNG facility from National Grid
Centrica, a leading energy company, has made a significant move in the liquefied natural gas (LNG) industry by purchasing the UK's Isle of Grain LNG terminal from the National Grid group for £1.5bn. This acquisition aligns with Centrica's strategy of investing in regulated and contracted assets supporting the energy transition.
In partnership with Energy Capital Partners (ECP), a leading energy infrastructure investment firm, Centrica will now own a crucial LNG import/export, regasification, and rapid response gas storage facility that plays a crucial role in balancing the UK's energy system. More than 70% of Grain LNG's capacity is contracted until 2038, and 50% until 2045, further emphasising its importance.
Centrica's 50% share of the equity investment is approximately £200m, after considering £1.1bn of new non-recourse project finance debt. This investment underpins the company's commitment to delivering predictable long-term, inflation-linked cash flows.
Chris O'Shea, Group Chief Executive of Centrica, has committed £3bn of capital to Sizewell C and the Isle of Grain. O'Shea, who led the acquisition, is confident that the deal will provide opportunities for efficiencies to create 'additional near-term value'.
Centrica has also signed an agreement with PTT, a Thai state-owned oil and gas company, for a 10-year supply of liquefied natural gas across various destinations in Asia. Deliveries are expected to begin in 2028. However, it's important to note that the liquefied natural gas supply from PTT is not mentioned as a part of Grain LNG's contracted capacity, nor is it expected to contribute to Grain LNG's role in balancing the UK's energy system.
Tyler Reeder, President and Managing Partner of ECP, is one of the largest private owners of natural gas generation and infrastructure assets in the US. Reeder expressed his belief that Grain LNG will increasingly be relied upon as critical infrastructure to deliver dependable energy to local markets.
The future development options for the terminal include a combined heat and power plant, bunkering, hydrogen, and ammonia facilities. This expansion could further solidify Grain LNG's position in the rapidly growing LNG industry and support Centrica's goal of delivering sustainable energy solutions.
It's worth noting that the US is seen as the global leader in low-cost LNG supply. Nevertheless, the acquisition of the Isle of Grain LNG terminal expands Centrica's footprint in the industry, positioning the company for potential growth in the global energy market.
Centrica's investment in the UK is also supported by favourable government investment policies, ensuring a promising future for the company's operations in the country. The acquisition of the Isle of Grain LNG terminal marks a significant step forward in Centrica's journey towards a sustainable and secure energy future.
