July 11, 2023 [Energy Intelligence]- Market talk has emerged of a potential sales process for UK-based National Grid’s interest in the Grain LNG import terminal.
A source at an advisory firm told Energy Intelligence that there is market discussion that a formal sales process for the terminal in southeast England could start in the autumn. The source said rumours of a sales process emerged months ago, later faded but have now resurfaced. A second source said some advisers are starting to sound out potential bidders. Infrastructure funds could be likely bidders if a sales process materializes, the sources said.
National Grid was unable to comment on the matter as per its corporate policy.
Any sale would be in line with other moves by National Grid to withdraw from the gas market. In January, National Grid completed the sale of a 60% equity interest in its UK gas transmission and metering business to a consortium of Macquarie Asset Management and British Columbia Investment Management.
The Grain LNG terminal in Kent in southeast England is the largest LNG terminal in Europe in terms of storage capacity. The facility has a nominal regasification capacity of 14.3 million tons and 1 million cubic meters of storage capacity — which will increase to 1.2 million cubic meters from 2025.
The LNG terminal has played an important role in securing gas for the UK and the wider European market after Russia curbed piped gas flows last year. The facility hit a new utilization record in the 12-month period from Jun.1, 2022 to May 31, 2023, sending out 102,589 gigawatt hours of gas (approximately 10.5 billion cubic meters), according to Grain LNG.
National Grid subsidiary Grain LNG has kicked off efforts to recontract around 9 million tons of existing capacity as the majority of current capacity agreements expire by the end of the current decade. Any sale of the terminal – if it proceeded — would likely occur after the capacity auction has concluded as long-term bookings would support the valuation, industry observers said.
Grain LNG launched a market consultation for the auction of the 9 million tons of capacity on Jun. 14, which runs until Jul. 26. Grain LNG is offering three lots, each consisting of approximately 3 million tons of regasification capacity, 42 berthing slots and 200,000 cubic meters of LNG storage from as early as 2029. The capacity is being offered under 5 year and 10 year deals or under a term contract ending on Jul. 14, 2045.
Grain LNG is looking to secure binding bids in October and expects to announce the results in early December with a view to obtaining final regulatory approvals in mid-December.
Current capacity holders include BP, Uniper, Centrica, Engie, Sonatrach and Iberdrola, data from data intelligence firm Kpler shows. QatarEnergy has secured up to 7.2 million tons of capacity under a 25-year deal starting in 2025.
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