US LNG export projects secure new sales in Asia and Europe

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US LNG projects continue to pass crucial milestones at an impressive rate, with recent weeks seeing the signing of new sales contracts to markets in Europe, South America and Asia, another world-wide (non-FTA) export licence approval – this time for Jordan Cove – and a formal application to the Federal Energy Regulatory Commission (FERC) by the Lake Charles project. Moreover, as Gastech News reported last month, Freeport LNG’s CEO Michael Smith expects his project to reach final investment decision (FID) before the end of this year. Cameron LNG is also in the running to achieve this.

Commercially, the most significant of the recent developments was the signing of two sales and purchase agreements (SPAs) with European utility Endesa for LNG from Cheniere Energy’s proposed second project: Corpus Christi. Along with an earlier contract agreed with Pertamina, these new SPAs effectively account for most of the output of one of the project’s first two 4.5 mtpa trains. Unlike the other front-runner projects, Corpus Christi will be a green-field development, not a conversion of an existing regasification facility.

At last month’s Gastech conference and exhibition in Korea, Cheniere’s CEO Charif Souki told Gastech News that he expects the project’s first two trains to be “sold out within six months”. A third train is planned, but its timing is not decided.

Construction of Cheniere's Sabine Pass

Construction of the first four trains at Cheniere’s first LNG export project – Sabine Pass – is well under way. First LNG is expected in 2015. (Source: Cheniere Energy)

Cheniere announced on 2nd April that it had signed an SPA with Endesa Generación for 1.5 mtpa on an FOB basis for a period of 20 years, with an extension option of up to 10 years. Deliveries are due to begin from the date the project starts up, which, says Cheniere, could be as early as 2018. The LNG will be loaded onto Endesa ships. Pricing is of the same form as the contracts for Sabine Pass, consisting of 115% of the Henry Hub price for the gas taken, plus a fixed liquefaction charge of $3.50/MMBtu (with the fixed charge being adjusted for inflation).

A few days later Cheniere announced a second SPA with Endesa, for 0.75 mtpa, taking the total to 2.25 mtpa.

FID by Q1, 2015: “We have now entered into a total of approximately 3 mtpa of SPAs at the project, completing the SPAs for Train 1,” said Souki. “We continue to work towards finalising additional commercial agreements and are nearing completion of the regulatory process, having recently received our scheduling notice from the FERC. We expect to complete all necessary steps to reach a final investment decision and begin construction by early 2015.

“Endesa is the second foundation customer for our Corpus Christi Liquefaction Project being developed in Texas. Endesa is a leading electric utility and major natural gas provider in Spain, and has significant operations throughout Latin America.”

Cheniere has already signed an SPA with Indonesia’s Pertamina for 0.8 mtpa. Corpus Christi is currently second in the queue for an export licence determination by the Department of Energy (DoE) for countries with which the US does not have a Free-Trade Agreement (non-FTA countries).

Cameron sale to CPC: In another significant commercial development, GDF Suez announced on the 28th March that it had signed a Heads of Agreement (HoA) for the sale of 0.8 mtpa of LNG to Taiwan’s CPC Corporation, for a period of 20 years, starting in 2018. The LNG will come from the Cameron LNG project, in which GDF Suez has a stake of 16.6%. Its partners in the project are Sempra Energy, Mitsubishi and Mitsui.

Jean-Marie Dauger, Executive Vice-President of GDF Suez, in charge of global gas and LNG, said: “This sales agreement . . . is part of GDF Suez’s ambition to deepen its role into the Asia-Pacific region and to expand long-term supply into a region where LNG demand for the future is high. We are pleased to be among the first movers in the export of shale gas from the US.”

The company has the third-largest LNG supply portfolio among the international oil and gas companies, amounting to 16 mtpa from six countries. It controls a fleet of 14 LNG carriers under mid- and long-term charter agreements and has significant regasification capacity in terminals around the world.

Non-FTA export approval for Jordan Cove: Coincidentally – or perhaps not – the DoE chose the first day of Gastech to announce that it had given non-FTA export approval to yet another project: Jordan Cove, one of the few on the west coast of the US. The approval, for a volume of 0.8 Bcf/d, equivalent to 6 mtpa, takes the total volume of gas approved for export to non-FTA countries to 9.45 Bcf/d, equivalent to 71 mtpa of LNG.

The next project in line for a non-FTA licence determination is Oregon LNG, also on the west coast, followed by Cheniere Energy for Corpus Christi and Excelerate for the Lavaca Bay floating LNG (FLNG) project. So far, the DoE has issued seven non-FTA approvals for six projects (Freeport LNG has two).

Formal FERC filing by Lake Charles: And finally . . . BG Group announced on 25th March that Trunkline LNG Company and Trunkline LNG Export, subsidiaries of Energy Transfer Equity and Energy Transfer Partners, had filed a formal application with the FERC for the siting, construction, and operation of Lake Charles LNG.

The companies hope to reach FID and begin construction in 2015, with first LNG exports expected in the second quarter of 2019. Lake Charles already has non-FTA export approval from the DoE for up to 2 Bcf/d.

Energy Transfer will own and finance the plant and BG will be responsible for the offtake. BG will also select the engineering, procurement and construction (EPC) contractor and manage construction. Upon completion, BG will operate the project under a long-term agreement with Energy Transfer. Trunkline Gas Company will provide pipeline transportation services for the supply of gas.

By Alex Forbes

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