Centrica has partnered with Energy Capital Partners (ECP) to acquire the Isle of Grain liquified natural gas (LNG) terminal in the UK from National Grid.
The enterprise value of the transaction is £1.5bn, with Centrica's equity investment amounting to approximately £200m for a 50% share.
Grain LNG is integral to the UK's energy security, offering essential LNG import/export, regasification and storage capabilities.
This acquisition aligns with Centrica's strategy to invest in assets that support the energy transition and provide predictable, long-term cash flows.
The terminal's capacity is fully contracted until 2029, with significant commitments extending to 2045.
Centrica Group CEO Chris O'Shea said: “The Isle of Grain terminal is a strategic asset that will support the UK’s energy security for many decades to come, keeping energy flowing reliably and affordably to households and businesses across the country as we transition to net zero."
The transaction presents opportunities for operational efficiencies and future development, including potential projects in combined heat and power, bunkering, and hydrogen and ammonia production.
Centrica's funding structure for the acquisition involves a combination of equity investment and non-recourse project financing.
The acquisition is set to generate strong returns for Centrica, with an expected unlevered internal rate of return (IRR) of around 9% and an equity IRR of more than 14%.
It is anticipated to contribute approximately £100m per annum to Centrica's EBITDA (earnings before interest, taxes, depreciation and amortisation) by 2028, with average annual cash distributions of around £20m for the years 2026–28.
ECP president and managing partner Tyler Reeder said: “As one of the largest private owners of natural gas generation and infrastructure assets in the US, ECP has long understood that natural gas is indispensable to keeping grids resilient and advancing the transition to a lower-carbon future.
"With the emergence of the US as the global leader in low-cost LNG supply and the growing need for reliable natural gas supply across the UK and Europe, we believe Grain LNG will increasingly be relied upon as critical infrastructure to deliver dependable energy to local markets."
In a related development, Thai energy company PTT has entered into a preliminary agreement to provide Centrica with LNG.
Scheduled to commence in 2028, the decade-long contract will see PTT delivering LNG to various locations throughout Asia, with the terms stipulating delivery with the shipping costs included.
