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Natural gas

Centrica and Energy Capital Partners Acquire Isle of Grain LNG Terminal from National Grid

Strategic Insights

— 2 min read

Centrica, the owner of British Gas, and US investment firm Energy Capital Partners have agreed to acquire the Isle of Grain liquefied natural gas (LNG) terminal from National Grid for £1.5 billion. The joint venture will secure £1.1 billion of new non-recourse debt to finance the purchase, with Centrica's share of equity investment amounting to £200 million. The terminal, currently undergoing an expansion, has an annual regasification capacity of 21.7 billion cubic meters and can store one million cubic meters of gas.

Key Takeaways:

  • The joint venture between Centrica and Energy Capital Partners will acquire the Isle of Grain LNG terminal from National Grid for £1.5 billion, with Centrica's share of equity investment being £200 million.
  • The terminal's annual regasification capacity will be increased to 27 bcm upon completion of the expansion, enabling it to handle up to 15 million tonnes of LNG per year, meeting a third of the UK's gas demand.
  • LNG is expected to play an increasingly important role in the UK's energy mix, accounting for around 60% of gas demand by 2050, compared to roughly 15% in 2024.
  • The acquisition is part of Centrica's strategy to invest in critical energy infrastructure with regulated or contracted cash flows, with the company committing £2 billion to such investments, around 75% of the capital committed to its ongoing programme.
  • The terminal's customers include TotalEnergies, Shell, Uniper, and Centrica itself, which has been one of the largest users and capacity holders since 2008.
  • The company expects the terminal to contribute £100 million per year to its earnings before interest, tax and depreciation (EBITDA) between 2026 and 2028, generating annual dividends for its shareholders of £20 million.
  • Centrica will leverage its knowledge and experience from operating the Barrow and Easington gas terminals to deliver operational and financing efficiencies.

Statistics:

  • The terminal's annual regasification capacity: 21.7 bcm
  • The terminal's storage capacity: 1 million cubic meters
  • The expansion's increase in regasification capacity: 5.3 bcm
  • The terminal's new storage capacity: 200,000 cubic meters
  • The estimated time to complete the expansion: Not explicitly stated
  • The expected contribution to Centrica's EBITDA: £100 million per year
  • The expected annual dividend for shareholders: £20 million
  • The size of the Isles of Grain site: 1,500 acres
  • The portion of the site occupied by the terminal: 300 acres

Sources:

  • "Centrica and Energy Capital Partners to acquire National Grid's LNG terminal" - [BBC News](https://www.bbc.com/news/business-63829624)
  • "Centrica and Energy Capital Partners agree to acquire Grain LNG terminal" - [Centrica](https://www.centrica.com/en/news/2024/centrica-and-energy-capital-partners-agree-to-acquire-grain-lng-terminal)

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