Big week for US LNG as new supply deals mount, FID at Corpus Christi
The US LNG sector has seen a flurry of activity this week, with a handful of new supply deals agreed and US LNG pioneer Cheniere Energy taking a final investment decision on the expansion of its Corpus Christi export facility.
US LNG suppliers Venture Global and Cheniere both announced separate sales deals with Chevron, while Venture Global also signed the first binding supply deal with a German company.
Sempra Infrastructure, meanwhile, agreed a preliminary supply contract with the energy arm of chemicals giant Ineos, which came on the back of a similar deal announced with Germany’s RWE in late May.
And with its positive FID for phase 3 of Corpus Christi, Cheniere said it planned to bring new US LNG volumes to market by the end of 2025.
Following Russia’s invasion of Ukraine in February, international gas buyers have been increasingly looking to the US to lock down long-term LNG volumes.
It comes as spot LNG prices remain at sustained highs given the continued tight global market conditions.
The benchmark Platts JKM price for spot LNG into northeast Asia reached a record-high $84.76/MMBtu in early March, according to S&P Global Commodity Insights pricing data.
The JKM has averaged $28.95/MMBtu so far in 2022 and was last assessed at $36.89/MMBtu on June 24.
Venture Global on June 22 said it had agreed two 20-year sales agreements with Chevron for a total of 2 million mt/year — 1 million mt/year from the Plaquemines LNG facility and 1 million mt/year from CP2 LNG.
Plaquemines LNG has been under full construction since August 2021 and the construction of CP2 LNG is expected to start in 2023, Venture Global said.
On June 21, Venture Global also signed a 20-year deal with German utility EnBW for the supply of 1.5 million mt/year of LNG from the Plaquemines and CP2 LNG export facilities, starting from 2026.
The agreement is the first direct binding offtake agreement for long-term US LNG signed by a German company.
Germany’s RWE in late May signed a heads of agreement with Sempra Infrastructure for the negotiation of a 15-year deal for the supply of 2.25 million mt/year of US LNG, but has yet to finalize the agreement.
Chevron, meanwhile, also signed June 22 separate US LNG sales deals with Cheniere for a combined 2 million mt/year of supply at plateau from Cheniere subsidiaries.
Under the first agreement, Chevron agreed to buy 1 million mt/year of LNG on an FOB basis from Cheniere’s Sabine Pass facility. Deliveries are set to begin in 2026 and reach the full 1 million mt/year during 2027, continuing until mid-2042, the companies said.
Under the second deal, Chevron agreed to take 1 million mt/year of LNG from Cheniere Marketing on an FOB basis with deliveries beginning in 2027 and continuing for 15 years.
This agreement with Cheniere Marketing is subject to Cheniere taking FID on the further expansion of Corpus Christi beyond the Corpus Christi phase 3 project.
The purchase price for LNG under the agreements is indexed to the Henry Hub price, plus a fixed liquefaction fee, they said.
Cheniere’s chief commercial officer Anatol Feygin said the new long-term agreements “underscore the growing demand for reliable LNG supply beyond 2040 and further support investment in additional LNG capacity beyond our Corpus Christi stage 3 project.”
Corpus Christi FID
FID on Corpus Christi phase 3 was also announced on June 22 by Cheniere, which said it had also issued full notice to proceed to contractor Bechtel Energy for the more than 10 million mt/year project.
“Reaching FID on Corpus Christi stage 3 represents an important milestone for Cheniere as we move forward on this significant growth project,” CEO Jack Fusco said.
He said the expansion would provide “much-needed” volumes to the global LNG market by the end of 2025.
Fusco added that the project was supported by a global portfolio of long-term customers and reflected the call for investment in gas infrastructure to support long-term energy security.