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The Haisla Nation and Pembina Pipeline Corporation (TSX: PPL; NYSE: PBA), joint partners in Cedar LNG Partners LP, have announced a positive Final Investment Decision (FID) on the Cedar LNG Project. This ambitious endeavor involves a floating liquefied natural gas (LNG) facility with a nameplate capacity of 3.3 million tonnes per annum (mtpa), located in the traditional territory of the Haisla Nation on Canada’s West Coast.
Project Overview
The Cedar LNG Project represents a significant step forward for the Haisla Nation and Pembina Pipeline Corporation. This floating LNG facility is designed to capitalize on the growing global demand for clean energy while ensuring the benefits are shared with the local Indigenous community. The project is poised to enhance the energy landscape on Canada’s West Coast, providing a substantial boost to the local economy and creating numerous job opportunities.
Financing Structure
The Cedar LNG Project is expected to be financed with a combination of debt and equity. Approximately 60 percent of the project cost will be covered through asset-level debt financing. Cedar LNG has already secured a construction term loan from a syndicate of banks, ensuring that the project has the necessary financial backing to move forward.
The remaining 40 percent of the project costs will be funded through equity contributions from both partners. The Haisla Nation has secured committed capital through the First Nations Finance Authority to cover their 20 percent equity contribution. This arrangement underscores the commitment of the Haisla Nation to the project and their belief in its potential to bring long-term benefits to their community.
Pembina Pipeline Corporation plans to fund its equity contribution from cash flow generated by its ongoing operations. The company has indicated that there will be no material change to its 2024 equity contributions for the Cedar LNG Project, with no additional post-FID contributions anticipated for the year.
Financial Assurances
Prior to the FID, Pembina was required to provide financial assurances to advance project-related upstream infrastructure projects. With the positive FID now in place, these financial assurances will be transferred to Cedar LNG. The project has secured a letter of credit facility to support the ongoing funding of these required assurances, ensuring a smooth transition and continued progress.
Support from Capital Providers
The Cedar LNG Project has received strong support from both domestic and international capital providers, reflecting the positive merits of the initiative. This widespread backing is a testament to the project's robust business case and its potential to deliver significant value to stakeholders.
