By Sabina Zawadzki and Rod Nickel
LONDON/WINNIPEG, Manitoba, Aug 16 (Reuters) - PieridaeEnergy, considering whether to build Canada's firstmajor liquefied natural gas (LNG) export terminal, is in talkswith Axpo, a Swiss utility and energy trader, for a 10-yearsupply deal, the companies said on Thursday.
A sales and purchase agreement would boost the chances thatPieridae would decide to build the C$10 billion ($7.6 billion)Goldboro project in Nova Scotia on Canada's Atlantic Coast,although high hurdles remain.
Canada is rich in gas but has yet to export major shipmentsof LNG to Asia from its Pacific Coast or across the Atlantic.The lack of big export terminals has depressed natural gasprices in Canada, while U.S. producers benefit from terminalsalong the Gulf Coast.
Axpo said in a statement that it would buy LNG fromGoldboro's second train, or liquefaction unit, for sales acrossEurope.
Deliveries are estimated to begin in the third quarter of2023.
The Axpo deal is ready to be finalized once Pieridae securesgas supplies from Eastern Canada and the northeastern UnitedStates, hopefully within five months, said Pieridae ChiefExecutive Alfred Sorensen in an interview.
Sorensen declined to identify the size of the Axpo supplyagreement. Pieridae already has a 20-year agreement to sell fivemillion tonnes annually to German utility Uniper.
Goldboro would produce 10 million tonnes annually startingin 2023 if construction begins by year-end.
Securing financing for such a large project, mainly throughofftakes, is a big challenge, however, for a company with aC$195 million market cap.
"Are we delusional about how we can get to the finish line?It really has been from the very beginning about how we can workwith the Germans and work to improve their energy security,"Sorensen said.
Germany depends heavily on gas imports from Russia and isseeking to diversify its suppliers. Pieridae is finalizing aloan guarantee of at least $3 billion from the Germangovernment.
The company is "very close" to securing enough committedsales to make a positive final investment decision, he said.
Pieridae is also in talks to acquire an undisclosed Albertagas producer to supply Goldboro, he said.
Five other projects on Canada's Atlantic Coast have beenproposed although initiatives have sputtered in recent yearswhen global LNG prices fell.
Another handful have been proposed for Canada's PacificCoast, where LNG would be exported to Asia.
One of the largest is LNG Canada, a proposed C$40 billionexport terminal in Kitimat, British Columbia. A decision whetherto proceed with that project is expected by year-end.
LNG Canada is a joint venture led by Anglo-Dutch giant RoyalDutch Shell Plc.($1 = 1.3126 Canadian dollars)(Reporting by Sabina Zawadzki in London, Rod Nickel inWinnipeg, Manitoba and Julie Gordon in Vancouver; editing byElaine Hardcastle and Phil Berlowitz)
