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Swiss Utility in Talks to Buy LNG from Canada's Goldboro Project

August 16, 2018

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 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.

Reporting by Sabina Zawadzki and Rod Nickel



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