February 23, 2024

Cheniere Energy Inc. has signed a marketing deal with ARC Resources US Corp. under which a pending Cheniere project in the US Gulf of Mexico liquefies natural gas from the United States arm of Canadian producer ARC Resources Ltd.

ARC Resources US will supply Sabine Pass Liquefaction (SPL) Stage 5 an average of 140 billion British thermal unit a day for 15 years starting with the opening of the first train of the expansion project in Cameron Paris, Louisiana. Startup is expected in 2025, with the project pending at the Federal Energy Regulatory Commission (FERC).

“SPL Stage 5 will pay ARC Resources an LNG-linked price for its gas, based upon the Dutch Title Transfer Facility (TTF) price, after deductions for a fixed regasification fee, fixed LNG shipping costs and a fixed liquefaction fee”, a recent joint press release said.

SPL Stage 5 adds two trains to six already fully operational units, each with a capacity of about five million tons per annum (MMtpa). Trains 7 and 8 are planned to produce about 20 MMtpa.

The expansion project has been accepted for a 180-day pre-filing review by the FERC, in a decision March 30. Cheniere plans to submit a full regulatory filing after this review.

Along with the agreement with ARC Resources, Cheniere and OMV Gas Marketing and Trading GMBH simultaneously announced an agreement for the delivery of up to 0.85 MMtpa of LNG to the Netherlands.

SPL Stage 5 will from 2029 supply the OMV AG subsidiary with up to 12 LNG cargoes per year at a TTF-linked price. The LNG will be regasified at the Gate LNG Terminal, a project of Koninklijke Vopak NV and Nederlandse Gasunie NV where Austrian majority state-owned OMV holds a regasification capacity. The media release did not disclose the duration of the agreement.

“OMV has made another significant step in diversifying and safeguarding alternative non-Russian gas supply sources for its customers in the long-term”, OMV executive vice-president for energy Berislav Gaso said in a separate news release.

“This agreement will enable Cheniere to deliver increased quantities of Canadian natural gas to Europe, where energy security has never been more important”, Cheniere president and chief executive Jack Fusco said in a statement, noting the agreement for SPL Stage 5 is the second integrated production marketing (IPM) collaboration between the company and ARC Resources.

ARC Resources president and chief executive Terry Anderson said of the IPM agreement, “Through this agreement, we are advancing our LNG strategy and delivering low-cost, low-emission natural gas to consuming regions in Europe – the first long-term arrangement of its kind for a Canadian producer”.

The IPM agreement is subject to certain conditions including a final investment decision (FID) on SPL Stage 5.

Earlier Cheniere announced it has bagged the first offtake commitment for the second train of SPL Stage 5. The agreement signed with Chinese gas distributor Foran Energy Group Co. Ltd. is for the purchase of about 0.9 MMtpa of LNG for 20 years.

The price of the purchase, subject to an FID on the train project and other conditions, is to be indexed on the Henry Hub distribution center in Louisiana.

“We are pleased to build upon our existing long-term relationship with Foran, one of the fastest growing natural gas companies in China, with the signing of our second 20-year SPA [sale and purchase agreement] that secures increased LNG volumes for Foran for the long term”, Fusco said in a joint press release November 2.

“This 20-year SPA further supports China’s commitment to growing natural gas as a primary energy source and provides Foran with a flexible and reliable LNG solution for its operations”.

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