Centrica, Ksi Lisims LNG enter HoA for long-term LNG supply

The UK’s Centrica Energy (CAN.L) announced last week that it had entered into a heads of agreement (HoA) to buy 1mn tonnes per year (tpy) of LNG from the proposed Ksi Lisims project in Canada. A sale and purchase agreement (SPA) still needs to be finalised by the two parties, but assuming this happens, the LNG would be sold on a free-on-board (FOB) basis over a period of 20 years.

Including this HoA, Ksi Lisims now has 9mn tpy of its planned 12mn tpy capacity covered by SPAs or HoAs. Centrica, meanwhile, said the agreement strengthens the resilience of its LNG portfolio, adding supply for its customers during a period of continued volatility in global energy markets.

"Energy security has never mattered more,” stated group CEO, Chris O'Shea. “Gas will continue to play an important role through the energy transition, and this agreement adds reliable, long-term LNG supply to our global portfolio, ensuring our customers around the world get the energy they need, when and where they need it.”

Ksi Lisims LNG would be located on the northwest coast of British Columbia and would be developed in partnership between the Nisga'a Nation, Rockies LNG and Western LNG. The developers have touted their plans to make Ksi Lisims one of the world's lowest-emission LNG projects, using renewable hydroelectricity from BC's grid to power the liquefaction process. This is expected to cut the facility’s carbon intensity by up to 90% versus conventional LNG plants.

“Canada is a stable, responsible energy partner, and Ksi Lisims, with its lower-carbon design and genuine partnership with the Nisga’a Nation, is exactly the kind of project we want to back,” stated O'Shea.

The HoA was also welcomed by Canadian Minister of Energy and Natural Resources Tim Hodgson, who described the agreement as “another strong vote of confidence in Ksi Lisims LNG”.

According to the announcement, construction on Ksi Lisims could begin next year, with LNG volumes subsequently anticipated in the early 2030s.

Western LNG’s president, founder and CEO, Davis Thames, said that a definitive SPA with Centrica was being targeted in the coming months.