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UPDATE 2-Woodfibre LNG signs second BP deal for British Columbia LNG plant

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·2 min read
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(Adds company comment)

May 6 (Reuters) - Canadian liquefied natural gas developer Woodfibre LNG said Thursday it signed a second agreement to sell LNG from its proposed export plant in British Columbia to a unit of oil major BP PLC.

That puts the plant a step closer to getting built in a market that has seen some cancellations in recent months but not many new projects.

Woodfibre said it will sell 0.75 million tonnes per annum (MTPA) of LNG to BP's BP Gas Marketing Ltd over 15 years on a free on board (FOB) basis.

This latest agreement will increase BP's total LNG off-take to 1.5 MTPA from Woodfibre's proposed 2.1-MTPA plant.

One MTPA is equivalent to 0.13 billion cubic feet per day of natural gas.

Woodfibre is one of a dozen companies developing North American LNG export plants that have said they could make a final investment decision (FID) to start construction in 2021. Most of those projects were carried over from 2020 and several were also carried over from 2019.

Woodfibre said it continues to target making a FID in the third quarter of 2021 at an estimated cost of around C$1.6 billion-C$1.8 billion. Analysts have said that would put the plant on track to produce first LNG around 2025.

Over the past two months, Annova, another LNG developer, stopped work on its export plant in Brownsville, Texas, and Pembina Pipeline paused development of its Jordan Cove project in Oregon.

Global LNG demand has increased every year since 2012 and hit record highs every year since 2015 mostly due to fast-rising demand in Asia.

But more recently, global gas buyers have been slow to sign new long-term contracts needed to finance the multibillion-dollar projects due to overbuilding of LNG export terminals in 2019 and coronavirus demand destruction and the collapse of gas prices in 2020.

(Reporting by Scott DiSavino. Editing by Jane Merriman, Kirsten Donovan)