By CHESTER DAWSON and HENDRIK VARNHOLT
A Canadian energy company said Monday it reached a deal with major German utility E.ON to export liquefied natural gas from a proposed plant on the Atlantic coast of Canada.
The multi-billion dollar project is one of several planned LNG terminal projects designed to export a glut of North American natural gas, which has depressed prices on the continent but made the gas more attractive to overseas buyers.
A handful of big and small energy producers are scrambling to line up approvals, financing and customers for a number of gas export projects in both Canada and the US.
In the deal announced Monday, Pieridae Energy (Canada) Ltd. said it plans to ship about 5 million tpy of LNG to Western Europe from a LNG plant it plans to build in Goldboro, Nova Scotia on Canada's Atlantic coast. The exact financial terms weren't disclosed, but E.ON said the contract is worth several billion euros per year.
It marks the first contract for a Canadian LNG export plant with a major end-user of gas, something that has so far eluded several proposed liquefaction facilities envisioned for Canada's Pacific coast, which are geared toward Asian markets.
Pieridae said LNG shipments would start by the first quarter of 2020, subject to clearing an environmental assessment in Nova Scotia. The plant will handle a yearly volume of around 10 million tons of LNG, which will be pumped onto ships for export.
"Our agreement with E.ON provides the economic security needed to complete the development of the first process train of the Goldboro LNG terminal," Pieridae CEO Alfred Sorensen said in a statement.
E.ON's commitment is viewed as an anchor deal that may help Pieridae convince other buyers to contract for its still-untested supplies of LNG. For E.ON, LNG from North American allows it to diversify its gas supply, which is now concentrated on deliveries from Russia.
Dow Jones Newswires