Cheniere Marketing, a subsidiary of Houston-based energy company Cheniere Energy Inc., has entered into a long-term sale and purchase agreement (SPA) to deliver liquefied natural gas (LNG) to Norwegian energy company Equinor ASA, according to press releases from both. companies
Equinor will buy approximately 1.75 million metric tons per annum (mtpa) of LNG from Cheniere Marketing for free for a purchase price indexed to the Henry Hub price plus a fixed liquefaction fee, Cheniere Energy said.
The term of the agreement is 15 years from the first delivery of the full volume of LNG. Half of the volume will begin delivery in 2027, and the remaining half will be delivered by the end of the decade, subject to a positive final investment decision for the first train of the Sabine Pass Liquefaction (SPL) expansion project Cheniere Energy, the company. said
The deal brings the total volumes Equinor has contracted with Cheniere to about 3.5 mtpa, doubling the LNG volumes Equinor will export out of Cheniere Energy’s LNG terminals on the US Gulf Coast, Equinor said.
Sabine Pass is Cheniere Energy’s LNG export facility located in Cameron Parish, Louisiana near the Gulf of Mexico. It has six fully operational liquefaction units, each capable of producing approximately five mtpa of LNG. SPL’s aggregate rated production capacity is approximately 30 mtpa and the company processes more than 4.7 billion cubic feet per day of natural gas into LNG, according to the company’s website. SPL has produced more than 2,000 cargoes since 2016, the company said.
Cheniere Energy is developing an expansion project adjacent to its existing SPL project, planning to add up to three natural gas liquefaction trains with an expected total production capacity of approximately 20 mtpa of LNG.
“We are pleased to expand our relationship with Equinor, one of Europe’s leading energy companies, building on the SPA we executed last year,” said Cheniere Energy President and CEO Jack Fusco. “This SPA underlines Cheniere and Equinor’s shared vision of an energy future based on reliable, flexible and cleaner energy solutions. This SPA is expected to provide further commercial support for the SPL expansion project, which we continue to rigorously develop for in order to meet the growing global demand for long-term secure energy supplies and the economic and environmental benefits of Cheniere’s LNG.
“Europe will need natural gas to ensure flexible energy on demand to support the creation of more intermittent renewables and LNG will play an important role,” said Helge Haugane, Senior Vice President Gas and Energy at Equinor. “In other markets, for example in Asia, demand for LNG is expected to grow as a solution for energy security and to reduce emissions. Equinor has the ambition to strengthen its role as a leading gas supplier natural and with our supply agreements with Cheniere we are expanding our global position.”
The LNG market is expected to grow significantly because of the role it will play in energy security and the transition to a cleaner energy mix in many markets, Equinor said.
According to the company’s website, Equinor is the largest exporter of gas by pipeline in Europe and the operator of Europe’s only large-scale LNG plant in Hammerfest, Norway.
In May, Cheniere also closed a long-term LNG purchase and sale agreement with Korea Southern Power for 0.4 mtpa of LNG from Cheniere Marketing on an off-vessel basis from 2027 to 2046.
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