September 25, 2014 / 10:27 PM / 5 years ago

Woodfibre LNG signs offtake pact with Guangzhou Gas

VANCOUVER, Sept 25 (Reuters) - Singapore-based Woodfibre LNG, which plans to build a liquefied natural gas (LNG) export terminal on Canada’s West Coast, signed a preliminary offtake agreement with Guangzhou Gas Group Co Ltd on Thursday covering nearly half of its planned annual output.

Under the memorandum of understanding (MOU), Woodfibre will provide the Chinese gas distributor with 1 million tonnes of LNG per year from its British Columbia facility over a 25 year period, starting in 2017. The company plans to be producing some 2.1 million tonnes per year by the first quarter of that year.

Backed by Indonesian billionaire Sukanto Tanoto’s RGE Group, Woodfibre LNG is an often overlooked front-runner in the race to build Canada’s first LNG export terminal. More than a dozen projects have been proposed along British Columbia’s coast.

Woodfibre signed the deal with Guangzhou Gas in Vancouver the same day that Malaysian state-owned oil and gas company Petronas said it might pull out of its much larger $10 billion LNG project in northern British Columbia over taxation issues.

British Columbia Premier Christy Clark played down the comments from the Malaysian company as a negotiation tactic. The province is set to reveal its controversial new LNG tax legislation in October, to be approved by the end of November.

Woodfibre plans to build its small LNG terminal on the site of a now-defunct pulp mill in the town of Squamish, 70 kms (43 miles) northeast of Vancouver. The site comes equipped with a deep-water port, power infrastructure and a gas pipeline. (Reporting by Julie Gordon; Editing by Cynthia Osterman)

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