Cheniere's second LNG contract fills export capacity target
Cheniere Energy Partners LP announced that its Sabine Pass Liquefaction LLC subsidiary has entered into a liquefied natural gas (LNG) sale and purchase agreement with Gas Natural Aprovisionamientos, a subsidiary of Gas Natural Fenosa.
Under the contract, Gas Natural Fenosa will purchase 3.5 million metric tons per year (metric MMtpy) of LNG from the Sabine Pass LNG receiving terminal, which is located on the Sabine Pass Channel in western Cameron Parish, Louisiana.
The agreement follows on the heels of an $8 billion, 3.5-metric MMtpy sale and purchase agreement between Cheniere and BG Group in October. The Gas Natural Fenosa contract takes Sabine Liquefaction's export contract capacity to the target of 7.0 metric MMtpy, which is expected to support the construction of the first two trains.
Sabine is developing liquefaction capabilities to produce 9.0 metric MMtpy of LNG in the first phase of its project at the Sabine Pass LNG terminal.
Under the agreement, Gas Natural Fenosa 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 NYMEX.
The agreement has a term of 20 years, commencing upon the date of first commercial delivery, and an extension option of up to 10 years. LNG deliveries are expected to commence in 2016.
Charif Souki, chairman and CEO of Cheniere Energy, said, "We welcome Gas Natural Fenosa as the next foundation customer for our Sabine Pass Liquefaction Project. Gas Natural Fenosa is a leading, integrated natural gas and power utility and a significant participant in the natural gas and LNG markets."
Souki also noted that, since the export capacity target of the first two trains has been met, Cheniere will soon make a final investment decision in order to begin construction of the first two LNG trains in early 2012. The project is being designed and permitted for up to four modular LNG trains, each with a nominal capacity of approximately 4.5 metric MMtpy.
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