Transaction Overview

In August 2025, Centrica and Energy Capital Partners (“ECP”) announced the acquisition of the Isle of Grain LNG terminal from National Grid for an enterprise value of £1.5 billion. The transaction completed on 28 November 2025. The acquisition was executed through a jointly owned three-layer special purpose vehicle (Topco–Midco–Bidco), with Centrica and ECP each holding a 50% economic interest. The deal was financed with £1.1 billion of non-recourse project finance debt and £400 million of equity. Santander (London branch) acted as financial adviser to the acquisition vehicle. Slaughter and May acted as legal adviser to Centrica, while Latham & Watkins acted as legal adviser to ECP and the acquisition vehicle. The asset acquired is the Isle of Grain LNG terminal in Kent, a large-scale LNG import, storage and regasification facility that connects directly into the UK’s national gas transmission network.

Asset Economics – How Grain LNG Makes Money

Grain LNG is an LNG import terminal that receives liquefied natural gas by ship, stores it in cryogenic tanks and regasifies it for delivery into the UK gas transmission system. In addition to its core regasification service, the terminal also provides ship reloading and road tanker loading services. Economically, the terminal operates on a toll-like infrastructure model. Revenues are generated primarily through long-term, inflation-linked capacity contracts, under which customers pay fixed reservation fees for bundled access to berthing slots, storage and regasification capacity. Additional revenue is earned from ancillary services such as reloading and truck loading. Grain LNG’s cash flows are highly contracted and visible. The terminal is 100% contracted until 2029, over 70% contracted until 2038, and over 50% contracted until 2045. The business generated revenue of £299 million and EBITDA of around £178 million in 2024, highlighting its high-margin, infrastructure-style earnings profile. For the year ended 31 March 2025, the terminal generated EBITDA of £176 million on a full-asset basis. Centrica expects its 50% share of EBITDA to be approximately £100 million per annum between 2026 and 2028, with average annual cash distributions of roughly £20 million over the same period. The transaction is underpinned by an expected 9% unlevered IRR and approximate 14%+ equity IRR. Grain’s customer base includes major global gas producers and traders such as QatarEnergy, Shell, TotalEnergies, Uniper and Venture Global, reinforcing the investment-grade nature of the contracted revenues.

Buyer Logic – Why Centrica Bought Grain LNG

Centrica is an integrated UK energy group operating across energy retail, energy management and infrastructure, best known for its British Gas supply business and its ownership of strategic UK gas storage and processing assets. Grain LNG fits naturally within Centrica’s infrastructure segment as a long-life gas import and storage asset, while also supporting its broader gas supply and optimisation activities through physical access to LNG imports. Strategically, the acquisition strengthens UK energy security, provides stable, inflation-linked infrastructure earnings, and reduces Centrica’s reliance on more volatile commodity-driven income streams. Management has consistently framed gas as a critical transition fuel, meaning assets like Grain remain strategically relevant for decades rather than being treated as short-term legacy infrastructure. Partnering with Energy Capital Partners allows Centrica to share risk and capital intensity while still retaining a 50% strategic stake and influence over one of the UK’s most important gas infrastructure assets.

Seller Logic – Why National Grid Sold

National Grid’s decision to sell Grain LNG follows its strategic exit from the UK gas transmission and metering business, which was fully divested between 2022 and 2024 through the sale of National Gas to a consortium of long-term infrastructure investors, including Macquarie Asset Management, British Columbia Investment Management Corporation and Australian Retirement Trust. As National Grid has repositioned itself as a predominantly electricity-focused regulated networks company, gas-adjacent assets such as LNG import terminals no longer align with its long-term strategic direction. Grain LNG had effectively become a non-core asset within a group now focused on electricity transmission, distribution and decarbonisation infrastructure. The sale therefore represents a clear case of portfolio recycling, allowing National Grid to extract value from a mature, fully contracted gas asset and redeploy capital into its core regulated electricity and energy transition investments.

Key Risks & Valuation Drivers

The valuation of Grain LNG is primarily driven by long-term UK LNG import volumes, the regulatory treatment of gas infrastructure, and the outlook for recontracting capacity once the current contract stack rolls off. The most material long-term risk is energy transition and gas demand risk. As the UK electrifies heating and expands low-carbon power generation in line with its Net Zero targets, structural demand for natural gas is expected to decline over the long run. While current contracts protect cash flows well into the 2030s and 2040s, weaker long-term gas demand could reduce future recontracting power and the asset’s future exit valuation. A second key risk is regulatory and political intervention. As LNG terminals are now considered assets of national energy security importance, future governments may impose stricter access rules, tariff oversight or windfall-style measures during periods of market stress, potentially compressing allowed returns.