UK’s Centrica buys Grain LNG terminal

British energy firm Centrica has agreed to purchase the UK’s largest LNG terminal, Grain LNG from electricity and gas utility National Grid for GDP1.7bn ($2.3bn), the company announced on August 14.

Centrica will combine with private equity firm Energy Capital Partners to complete the purchase, which still needs UK government approval.

For Centrica, the deal allows the company to expand its control of the UK’s energy supplies. Centrica owns the UK’s largest gas storage facility, Rough, which is located in East Yorkshire.

The facility closed in 2017, but partly reopened in October 2022 after an energy crisis emerged in Europe following Russia’s invasion of Ukraine.

However, Centrica’s CEO Chris O’Shea cautioned earlier this year that Rough may need to be shut down if London does not provide assistance for the facility’s redevelopment.

Centrica had already contracted capacity at the Grain LNG terminal prior to purchasing the facility. Other companies that have purchased capacity at Grain LNG include BP, Sonatrach, TotalEnergies, Uniper, and Pavilion.

The announcement marks a U-turn after it appeared that Hong Kong-based CK Infrastructure had the leading track to acquire the LNG terminal with a production capacity of 15mn tonnes per year (tpy).

CK Infrastructure had been rumoured to be offering the UK utility GBP 2bn ($2.7bn) for Grain LNG, however, the deal fell apart.

Over 20 bidders had expressed interest in acquiring the terminal located on Grain Island, about 60km east of London. A consortium led by the Ontario Municipal Employees Retirement System (OMERS), a Canadian pension fund was also believed to have put forth a strong bid.

The sale of Grain LNG marks the end of a lengthy process for National Grid, which first announced its intentions to divest from the LNG terminal in May 2024 as part of plans to streamline its operations.

National Grid is seeking to shift away from possessing energy production sights and pivot towards building and maintaining electricity and gas pipes.