Pieridae Engages German Banking Adviser - UPDATE
Pieridae Energy, which is advancing the development of a 10mn metric tons/year (mt/yr) LNG export terminal on Canada’s east coast, said August 15 it has retained the services of Germany’s KfW Ipex-Bank to advise it in finalising a multi-billion-dollar untied loan guarantee from the German government.
In 2013, Pieridae received written confirmation that the proposed Goldboro LNG project would qualify under the German government’s UFK program for a guarantee of up to US$3bn of project debt financing, provided Goldboro would deliver at least 1.5mn mt/yr of LNG to Germany or Europe.
Since 2013, Pieridae has held a 20-year sales and purchase agreement (SPA) with Germany’s Uniper for up to 5mn mt/yr, qualifying it for the UFK programme. Three months ago it also entered into a term sheet with another European offtaker to negotiate a 10-year SPA for up to 1mn mt/yr of LNG from Goldboro’s second liquefaction train. On August 16, Swiss utility and energy trader Axpo issued a statement saying it was the offtaker in question.
In July this year, Pieridae applied to the German government to increase the amount of the loan guarantee by US$3bn, with the additional funding targeted towards developing natural gas reserves in western and eastern Canada. The company is currently negotiating a potential acquisition using that funding.
Over the coming months, Pieridae will launch the formal process to secure the required capital (equity and debt) to finance Goldboro LNG. To that end, KfW IPEX-Bank will work with Morgan Stanley and SG Americas Securities, Pieridae’s global financial advisers.
“We are extremely happy with the addition of KfW IPEX-Bank to our team of financial advisers given their knowledge and expertise specific to the UFK program,” Pieridae CEO Alfred Sorensen said. “As we progress through our upstream acquisition and development plan toward a final investment decision on the Goldboro LNG project, the support of the German government is of vital importance.”
That additional financing, along with the potential for Pieridae acquiring western Canadian gas reserves, could be the final pieces that allow Pieridae to move to FID on the Goldboro project, according to a recent institutional equity research report from CIBC.
“The project has its complexities, but is quite advanced on a number of fronts and this could be the first project of scale shipping LNG overseas,” CIBC says in the July 30 research report. “Although Goldboro’s location on the other side of the country appears to place it at a proximity disadvantage versus the bulk of Canadian supply, a key benefit is that there is substantial existing gas transportation infrastructure from western Canada to Nova Scotia which is under-utilised.”
Minor upgrades to TransCanada's existing pipeline assets in the Canadian province of Quebec and in New Hampshire, Maine and Massachusetts in the US, CIBC says, would allow Goldboro to link directly with western Canadian gas reserves, while there would also be the possibility of accessing up to 1bn ft³/day from the US. Both supply options would involve reversing the flow of the under-utilised Maritimes & Northeast Pipeline, which was built in the 1990s to move gas produced from the Sable Offshore Energy Project and the Deep Panuke project offshore Nova Scotia to markets in the US. Those fields are depleted, and their owners are in the process of abandoning both the onshore and offshore facilities associated with them.