Kitimat LNG signs MOU with Spain’s Gas Natural

Kitimat LNG announced it has entered into a Memorandum of Understanding (“MOU”) with Spain’s Gas Natural (GAS.MC). Under the terms of the agreement, Gas Natural will acquire 30% of Kitimat’s output from their planned Liquid Natural Gas facility located in Kitimat, BC and provides Gas Natural an option to acquire and equity stake in the terminal.

The MOU will will see Gas Natural acquire up to 1.6 million tonnes of LNG a year from the Kitimat LNG facility for 20 years and is the second major supply agreement announced by Kitimat LNG in the last month. In early June Kitimat LNG signed a similar MOU with Korea Gas Corp (“KoGas”) to acquire 2 million tonnes of LNG a year from the terminal for 20 years. KoGas als has an option to acquire an equity stake in the terminal.

Originally planned as an import terminal until recent discoveries and technologies allowed extraction of massive amounts of shale gas in the Horn River basin and Montney basin in northeast British Columbia. Massive infrastructure investments from the BC Provincial government, Encana Corp, TransCanada and others will connect Kitimat with these massive natural gas reserves. Kitimat LNG will be a export terminal to sell natural gas to the international market – including KorGas and Gas Natural. Initial export capacity will be 3.5 million to 5 million tonnes of LNG per year.

Gas Natural supplies natural gas to 11 million customers in Spain, France, Italy and Latin America, and has a generating arm producing electricity in Spain, Mexico and Puerto Rico. It is also in a joint venture with Repsol (REP.MC) which operates a fleet of LNG carriers.

Reuters: Spain’s Gas Natural may take stake in Canadian LNG