Pembina, Petronas sign long-term deal for Cedar LNG

Executive Summary

• Pembina Pipeline Corp. and Petroliam Nasional Berhad (Petronas) have entered into a 20-year synthetic liquefaction service agreement for 1.0 million tonnes per annum (mtpa) of capacity at the Cedar LNG facility.
• The agreement provides Petronas with an additional natural gas export outlet for its Canadian upstream investments, while securing Pembina with a stable, long-term, take-or-pay revenue stream.
• This marks the first step in Pembina's remarketing efforts for the Cedar LNG project, with the company expecting to secure definitive agreements for the remaining 0.5 mtpa of capacity by the end of 2025.

Key Details

• Parties Involved: Pembina Pipeline Corp. (via subsidiary) and Petroliam Nasional Berhad (via Petronas LNG Ltd).
• Agreement Term: 20 years.
• Capacity: 1.0 million tonnes per annum (mtpa) of liquefaction capacity.
• Structure: Synthetic liquefaction service structure; Pembina provides transportation and liquefaction capacity.
• Commercial Terms: Take-or-pay revenue stream for Pembina.
• Strategic Context:
  • Enables Petronas to access Canadian natural gas export outlets.
  • Validates Cedar LNG and highlights demand for global export capacity due to competitively priced feedstock and advantaged shipping distances to Asian markets.
  • Supports energy security and the transition to cleaner fuels in Asia.
• Project Status & Timeline:
  • Cedar LNG project remains on time and on budget.
  • Total project value: $4 billion (U.S.) gross.
  • Expected in-service date: Late 2028.
  • Pembina previously secured a 20-year take-or-pay agreement for 1.5 mtpa in June 2024 to support the final investment decision.
  • Pembina expects to reach definitive agreements for the remaining 0.5 mtpa of capacity by the end of 2025.
• Project Background: Cedar LNG is a partnership between the Haisla Nation and Pembina Pipeline to develop a floating LNG facility in Kitimat, B.C., powered by renewable electricity from B.C. Hydro.

Notable Quotes

• Stu Taylor, Senior Vice-President and Corporate Development Officer, Pembina: "Petronas is a global LNG industry leader and one of the largest gas producers in Canada. This agreement is an extension of our existing relationship with them and an important development in Pembina's ongoing expansion of its export business. This agreement further validates Cedar LNG and highlights the strong demand for global export capacity given the clear advantages of Canadian West Coast LNG, including competitively priced feedstock and advantaged shipping distances to Asian markets."
• Shamsairi M. Ibrahim, Vice-President of LNG Marketing and Trading, Petronas Gas and Maritime Business: "This milestone reflects Petronas's long-standing commitment to our investment in Canada and our continued effort to fortify our global LNG supply portfolio. We welcome this partnership with Pembina and the Cedar LNG project, as it underscores Petronas's role as an integrated energy player and demonstrates our dedication to responsibly monetize our gas resources."