Centrica, ECP to Acquire Isle of Grain LNG

Centrica plc said it has acquired the Isle of Grain liquefied natural gas (LNG) terminal in the United Kingdom in partnership with Energy Capital Partners LLP (ECP) from National Grid for an enterprise value of $2.03 billion (GBP 1.5 billion).

After taking into account approximately $1.49 billion (GBP 1.1 billion) of new non-recourse project finance debt, Centrica’s 50 percent share of the equity investment is approximately $271.13 million (GBP 200 million), the company said in a news release.

Centrica and ECP will hold the investment in Grain LNG through a jointly controlled entity with customary governance provisions, including reserved matters, according to the release.

Centrica said that there are “opportunities for efficiencies to create additional near-term value,” with future development options including a combined heat and power plant, bunkering, hydrogen and ammonia.

The acquisition is expected to close in the fourth quarter, conditional upon certain regulatory approvals being received, including approval under the National Security and Investment Act and certain mandatory anti-trust approvals, ECP said in a separate statement.

Grain LNG is Europe’s largest LNG regasification terminal and is located east of London. Its primary service is the provision of LNG storage and regasification capacity to customers under long-term, inflation-linked capacity contracts. The terminal has an annual regasification capacity of 21.7 billion cubic meters and tank storage capacity of 1 million cubic meters, according to the statement.

Grain is currently undergoing an expansion of 5.3 billion cubic meters of additional regasification capacity and an additional 200,000 cubic meters of storage capacity. After completion of the ongoing expansion of the site it will be able to provide up to a third of the UK’s gas demand, the statement said.

Centrica Group Chief Executive Chris O’Shea said, “The Isle of Grain terminal is a strategic asset that will support the UK’s energy security for many decades to come, keeping energy flowing reliably and affordably to households and businesses across the country as we transition to net zero. That’s why we are so pleased to be investing, continuing Centrica’s pivot towards long-term, predictable infrastructure cash flows, underpinning our medium-term guidance and creating valuable future options”.

“We are delighted to be partnering with ECP, a highly experienced investor in energy infrastructure around the world. We look forward to working with them and Grain LNG’s management team to deliver on the full potential of this unique asset for customers and the country,” O’Shea continued.

“Our decision to commit [GBP 3 billion] of capital in both Sizewell C and the Isle of Grain demonstrates the attractiveness of the UK as an investment location underpinned by supportive government investment policies,” he added.

ECP President and Managing Partner Tyler Reeder said, “As one of the largest private owners of natural gas generation and infrastructure assets in the U.S., ECP has long understood that natural gas is indispensable to keeping grids resilient and advancing the transition to a lower-carbon future. With the emergence of the U.S. as the global leader in low-cost LNG supply and the growing need for reliable natural gas supply across the UK and Europe, we believe Grain LNG will increasingly be relied upon as critical infrastructure to deliver dependable energy to local markets”.

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