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Alfred Sorensen, president of Pieridae Energy Canada.Andrew Vaughan/The Canadian Press

The backers of a liquefied natural gas project on Canada's East Coast unveiled a large export contract with a major European utility firm Monday, adding to momentum to make the massive Goldboro LNG export terminal a reality.

Goldboro signed a multiyear supply agreement with E.ON AG, a publicly traded German company, according to a statement. The deal gives Goldboro an anchor customer, making it easier to attract more business. Companies from India, for example, have been reluctant to sign agreements until infrastructure is in place.

The agreement is a milestone for Canada's energy industry, with attention surrounding liquefied natural gas shifting to the East Coast from the West Coast, where companies have proposed at least six export projects. On the other side of the Atlantic, it signals how European companies are looking to ease their reliance on Russia's OAO Gazprom. Indeed, both companies involved in the transaction focused on how their deal is about diversifying supply.

"We are pleased to have reached a long-term agreement with E.ON, which will provide the European gas market and Germany particularly with a new secure source of natural gas supply," Alfred Sorensen, chief executive officer of Pieridae Energy (Canada) Ltd., which is developing the LNG project, said in the statement.

Klaus Schäfer, chief executive of E.ON's energy trading unit, echoed that sentiment.

"With such transactions as the supply deal with Goldboro, underscoring its intention to make its energy trading more global in order to minimize risks and seize market opportunities in different continents for the benefits of its customers," he said in an e-mail statement from a company representative. "Canada would be a new gas supply region for E.ON and thus enable E.ON to further diversify its gas supply portfolio."

Goldboro will send roughly five million tonnes of LNG a year for 20 years to E.ON, which will deliver to a number of places in western Europe, the statement said. That volume of gas equals the first phase of a proposed project in Kitimat on the British Columbia coast.

Five million tonnes a year is worth about $1-billion, one source estimated ahead of the announcement. The companies involved did not release a price tag, but the statement detailing the deal said: "LNG pricing in the agreement is based on market prices of natural gas in the Western European market."

Pieridae Energy expects to complete the early engineering phases and environmental assessment process this year.

The proposed facility, which expects commercial operations to begin in 2020, will have the capacity to move 10 million tonnes of LNG a year. Its capital expenditures will be between $5-billion and $10-billion, according to the company The LNG terminal is to be built in Guysborough, N.S.

Exports of natural gas from Canada's East Coast will push up North American prices for the commodity, and there are a number of natural gas fields near Canada's East Coast – both on and offshore – that would benefit from projects such as Goldboro.

Mr. Sorensen gives the Goldboro LNG project clout. He founded Galveston LNG Inc., now known as Kitimat LNG, and sold it to Apache Corp. and EOG Resources Inc. for $300-million.

This time, however, Mr. Sorensen has his eye on serving as a supplier, too. Pieridae struck a joint venture with Contact Exploration Inc. to "source, develop and produce natural gas to serve as significant portion of the feedstock" for Goldboro, the companies said in a press release March 4.

Goldboro said natural gas supply could come from the Marcellus formation in the northeastern United States, New Brunswick and on and offshore Nova Scotia. The Sable offshore project, owned by Exxon Mobil Corp., Royal Dutch Shell PLC, Imperial Oil Ltd., Pengrowth Energy Corp. and Mosbacher Operating Ltd., could also benefit and is only 200 kilometres to Goldboro.

Corridor Resources Inc., a small operation with operations on the East Coast, also mentions Goldboro's export potential when trying to attract investors.

Goldboro hopes to attract customers in Europe, South America, and South Asia, according to marketing materials. It is a shorter distance to India off Canada's East Coast than from the British Columbia coast.

Canada does not have an LNG export facility, and hosts only one import operation – the Canaport LNG facility in Saint John. Some proposed projects in British Columbia have attracted wealthy owners, cleared some regulatory hurdles and signed shipping contracts. While the B.C. government recently formally rejected the proposed Northern Gateway oil sands pipeline to its coast, Premier Christy Clark is a fierce advocate of developing natural gas projects, as well as export terminals, in the province.