By BEN LEFEBVRE
Freeport LNG Expansion signed an agreement
allowing a BP subsidiary to export 4.4 million tpy of liquefied
gas out of its terminal in Freeport, Texas, the company
The arrangement shows the continuing progress of the US
LNG-export business despite only one company, Cheniere Energy,
holding the necessary government permits to ship gas to a
majority of foreign countries.
Freeport and competitor Cameron LNG, a subsidiary of Sempra
Energy, are waiting for federal approval to ship LNG
to countries in free-trade agreements with the US.
Freeport said the 20-year tolling agreement with BP would
begin after construction is completed of its
second liquefaction unit on Quintana Island near Freeport,
Texas. It expects to begin shipments in 2017.
The companies didn't disclose the exact terms of the
Now that Freeport has secured customers for the entirety of
its two planned liquefaction segments, the company expects to
gain the financing to build them as soon as the company
receives the necessary government permits, Freeport LNG
CEO Michael Smith said.
"With the first two liquefaction trains of the project fully contracted, we intend
to approach the financing markets imminently so that we can
begin construction on the initial
two-train facility as soon as we receive (government)
approval," Mr. Smith said.
Freeport LNG in July signed contracts to supply a combined
4.4 million tpy of LNG to Japanese utilities Osaka Gas Co. and
Chubu Electric Power Co.
Utility companies in Japan, South Korea, Spain and elsewhere
are eager to buy natural
gas from the US. Thanks to a drilling boom brought by new
drilling methods, US natural gas prices are among the lowest in
Meanwhile, BP and other North American natural gas producers
are eager to reach a global market in hopes of boosting natural
gas prices at home. Natural gas futures closed at $3.27/MMBtu
Friday, down from $13.69 in July 2008.
"We look forward to serving our LNG
customers with even more flexibility from our portfolio of natural
gas," Paul Reed, CEO of BP Integrated Supply & Trading,
said in a statement.
Dow Jones Newswires