Cheniere and BG Sign 20-Year LNG Sale and Purchase Agreement (10/26/11)
HOUSTON, Oct. 26, 2011 /PRNewswire via COMTEX/ --
Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE Amex: CQP) announced today that its subsidiary, Sabine Pass Liquefaction, LLC ("Sabine Liquefaction"), has entered into its first liquefied natural gas ("LNG") sale and purchase agreement ("SPA") with BG Gulf Coast LNG, LLC ("BG"), a subsidiary of BG Group plc, under which BG has agreed to purchase 3.5 million tonnes per annum ("mtpa") of LNG. Sabine Liquefaction is planning to develop the ability to produce 9 mtpa of LNG in the first phase of its project at the Sabine Pass Terminal owned by Cheniere Partners. On May 20, 2011, Sabine Liquefaction received authorization from the U.S. Department of Energy to export up to 16 mtpa of LNG destined to all countries with which trade is permissible.
Under the agreement, BG will pay Sabine Liquefaction a fixed sales charge for the full annual contract quantity and will also pay a contract sales price for LNG purchases based on the applicable Henry Hub index traded on the New York Mercantile Exchange. LNG will be loaded onto BG's vessels. The SPA has a term of twenty years commencing upon the date of first commercial delivery, and an extension option of up to ten years. LNG exports are expected to commence as early as 2015. The SPA is subject to certain conditions precedent, including but not limited to Sabine Liquefaction's receiving regulatory approvals, securing necessary financing arrangements and making a final investment decision to construct the liquefaction facilities.
"BG is one of the largest participants in the global LNG markets and will be a strong foundation customer for our Sabine Pass liquefaction project," said Charif Souki, Chairman and CEO. "Entering into this agreement is a significant milestone for our project and we look forward to finalizing additional commercial agreements and proceeding with the development of the first two trains."
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Replies to This Discussion
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Permalink Reply by Clyde T. Williams on
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For LNG consider the following and how it may influence the Tex/LA gas prices.
California is looking for shale gas NOW, if we get good sources then the north and south pipelines will have lots of spare capacity with fewer using it - Oregon/Washington people are looking for a Pacific Coast LNG terminal site for Japan - the new player on the market-ByeBye NUCs and maybe China (but they are actively looking for shale gas).
NE US is bringing lots of shale gas online and thereby dropping prices delivered to end user for you all in TexLA and eventually thru US or NE canadian terminals may start exporting LNG to European - good competitve position vs Russian Gas (they are also looking at shale gas and Arctic Ocean basins.
So Tex/LA needs to use existing pipelines to find other market, rather than the soutwest pipelines to California or the NE pipelines to DC-Boston ==== LNG for SoAmer ???
We got and will have a glut of gas...but recently the LosAngDeptWater&Power started hedging contracts of $5-6+ because they have to repower alot of old gas plants and maybe coming off coal at Mohave and Navahoe coal plants and will need alot of gas for repowering these plants - with their existing transmission grids...This ($5.5 gas) is already driving shale gas exploration in the Central Valley of California and within 1-2 years I believe we will have = or bigger glut than in LA.
So if you can get the LNG markets in Brazil-Panama you will have a chance of getting >$4 gas, elsewise you may wait 5+yrs. I don't think you can compete against the NE shale gas producers for the European LNG market and the Northern CentralUS and soon Wyoming/Montana shale gas for the Japanese/Chinese markets...Go south young man, go south...OBTW it is so nice to listen to real people...compared to the LosAngelenos Tom
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Permalink Reply by ALongview on -
Isn't that why they secure twenty year sales agreements ahead of time? Those agreements along with close proximity infrastructure and gas fields as well as a friendly State regulatory environment would seem to me to be the reasons why they didn't choose another location.......especially CA or OR. Just wait till they blame a CA earthquake on fracking!
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Permalink Reply by Clyde T. Williams on
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The main issues with the 20 year agreement are 1) you need that to buiild the liquefaction plant, not a small thing and a lot of heat exchangers and cooling towers - should be doen along with a chloralkaline plant...but 2) need for long term source of CHEAP gas and LA/Tex gas should be amoungst the cheapest - ??any new users??? then the North Plains/Wyom/Mont which have lots of shale gas potential and proximity to large transmission - same problem delivered price to users - mostly California....
Yeah we are have rumbling about underground about secondary recovery and hi-pressure jetting (many oil fields less than 4000ft and in soft rocks - can't frack mud.
Tom
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