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13 years is not long enough: Glencore and Cheniere Sign Long-Term LNG Deal
11/16/2021
A liquefied natural gas (LNG) binding sale and purchase agreement (SPA) has been concluded between Cheniere Energy Inc. and Glencore plc.
Earlier last month, Cheniere announced that Glencore had entered into a free-on-board agreement with Cheniere Marketing for approximately 0.8 million tons of LNG per annum, starting in April 2023 for a period of 13 or more years.
LNG is sold per the SPA at a price index based on the Henry Hub price plus a fixed liquefaction fee.
With the signing of this long-term transaction, Cheniere solidifies its position as a global LNG provider, and the company looks forward to a successful long-term relationship with Glencore, one of the world's biggest commodities producers and a leading player in the global LNG market.
This SPA demonstrates the commercial momentum Cheniere has been enjoying and marks another important milestone in contracting LNG capacity, as the company lays the groundwork for a final investment decision on Corpus Christi Stage 3, which Cheniere expects to occur next year.
A total nominal production capacity of approximately 10 mtpa is being planned for Corpus Christi Stage 3 with up to seven midscale liquefaction trains. And all regulatory approvals have been received already.
Adding fuel to the deal, China Petroleum & Chemical Corp., a state-owned company, also signed two contracts last week to purchase LNG from a proposed Louisiana LNG project being developed by U.S. LNG company Venture Global.
Natural gas is now a critical part of a growing global economy, and Cheniere Energy, Inc. is the world's largest producer and exporter of LNG in the United States. The company is a full-service LNG provider, dealing with gas procurement and transportation, liquefaction, vessel chartering, and LNG delivery.
Chenieres’ Sabine Pass and Corpus Christi LNG plants on the Gulf Coast of the United States represent one of the largest LNG liquefaction platforms in the world, with a maximum production capacity expected to be 45 million tons per year. Cheniere is also exploring the potential of expanding its liquefaction operations and other projects within the LNG value chain. The company is located in Houston, Texas, and has offices in London, Singapore, Beijing, Tokyo, and Washington, D.C.
Glencore, for its part, is one of the world's largest globally diversified natural resource companies, which was founded in the 1970s as a trading company. Today, it is a major producer and marketer of commodities, comprising around 150 mining, metallurgical, and oil production assets with 135,000 people employed worldwide.
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Pivot to the South: LNG Plants Under Development by Sempra Energy in Louisiana and Mexico
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Sempra Energy would develop the 4.0-mmtpa Vista Pacifico LNG export facility located next to the company's Terminal for Refined Products in Topolobampo in a bid to provide gas from the Permian basin in Texas and New Mexico to Asian markets. Once marketing begins, Sempra's management expects Vista Pacifico to be oversubscribed.
Cheniere’s LNG Is on the Next Level Due to Corpus Christi Expansion FID
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According to CheniereEnergy’s board of directors announcement on June 22, the company declared the further expansion of its CorpusChristi, Texas. Moreover, the LNG plant could come sooner than expected due to the announcement of a final investments decision (FID) related to Stage 3 Liquefaction Project work at the export facility. It will ensure the capacity to ship 10-plus million tonnes per annum (mtpa) from 7 midscale trains. Furthermore, TudorPickering, Holt & Co. (#TPH) declared on June 23, that the possible ultimate capacity of the facility could be in the 11-12 mtpa range given 10.7 mtpa of long-term contracts have been signed with companies such as CPC, PGNiG, Sinochem, Foran, ENGIE, Apache, EOG and ARX CN. Additionally, Cheniere announced two sale and purchase agreements (SPAs) with #ChevronCorp.: Firstly, Chevron will obtain 1 mtpa of LNG from Sabine Pass Liquefaction LLC with deliveries considered to start in 2026. Deliveries will reach full capacity in 2027 and expire in mid-2042. Secondly, Chevron will obtain 1 mtpa of LNG from Cheniere Marketing LLC with deliveries considered to start in 2027 and continue for about 15 years. The purchase price for the LNG under both SPAs will be indexed to the Henry Hub price, plus a fixed liquefaction fee as Cheniere claimed. Since the expansion will have been completed, Cheniere’s aggregate nominal production capacity will be increased to more than 55 mtpa by the end of 2025 compared to 45 mtpa now. It will become a part of the industry-wide decarbonization movement away from coal and oil as this allows Cheniere to provide the global market with additional low-carbon fuels. First exports from the facility are anticipated in 2025.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/184Blog_Rangeland Energy Divests Canadian Pipeline to Kingston Midstream.png)
Rangeland Energy has agreed to sell Rangeland Midstream Canada to Kingston Midstream Alberta and remains committed to future Canadian midstream investments. Texas-based Rangeland Energy, supported by financial partner EnCap Flatrock Midstream, has inked a deal to sell its Canadian subsidiary, Rangeland Midstream Canada Ltd., to Calgary's Kingston Midstream Alberta Ltd. for cash.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/187Blog_ONEOK Completes Acquisition of Magellan Midstream.png)
The merger between ONEOK and Magellan received approval from Magellan shareholders, securing just 55% of the total votes at Magellan’s meeting on Sept. 21. ONEOK Inc. has successfully concluded the acquisition of Magellan Midstream Partners LP on Sept. 25. The deal will bring together their respective assets and expertise, resulting in a powerful entity boasting an extensive network of approximately 25,000 miles of pipelines primarily focused on transporting liquids.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/186Blog_Viper Energy Secures $1 Billion in Permian.png)
Viper Energy's deal, comprised of cash and equity, secures an additional 2,800 net royalty acres in the Midland Basin and 1,800 in the Delaware Basin. Viper Energy Partners LP, a Diamondback Energy Inc. subsidiary, has inked a deal to acquire mineral and royalty interests in the Permian Basin. The deal, valued at around $1 billion, is with Warwick Capital Partners and GRP Energy Capital. Viper was established by Diamondback with the purpose of owning, purchasing, and capitalizing on oil and natural gas assets in North America, specifically targeting mineral and royalty interests.