Cheniere signs deal to provide LNG to China

Staff Report
Cheniere Energy Inc. of Texas, the force behind a liquefied natural gas export terminal near Sabine, has announced what is being described as the first long-term commitment to provide LNG to China.
The company said it signed two sale and purchase agreements with the state-run China National Petroleum Corp.
Cheniere’s subisidiaries, Corpus Christi Liquefaction LLC and Cheniere Marketing International LLP and CNPC subsidiary PetroChina International Company Limited will purchase approximately 1.2 million tonnes per annum of LNG, with a portion of the supply beginning in 2018 and the balance beginning in 2023. The term of each SPA continues through 2043. The purchase price for LNG will be indexed to the Henry Hub price plus a fixed component, the company said.
“We are pleased to announce these LNG contracts with China National Petroleum Corporation, an important global energy player in one of the largest and fastest growing LNG markets worldwide,” said Jack Fusco, Cheniere’s president and CEO. “These long-term SPAs build upon the Memorandum of Understanding we signed in November, and we look forward to a successful long-term partnership with CNPC. We expect these agreements to support the development of Corpus Christi Train 3, and we are now focused on completing the remaining necessary steps to reach a final investment decision later this year.”
CNBC described China as “the fastest growing LNG market in the world, importing 26.1 million tons in 2016.”
Until now, reports the Financial Times the country has been buying spot cargoes rather than using the long-term contracts that exporters need to be able to finance new plants.
In the futures market, gas for delivery in Asia next month is trading at almost $10.50 per million British thermal units, compared to a benchmark US Henry Hub price of $2.60.
Cheniere has what is described as the only big LNG export terminal in the country at Sabine Pass.
Media accounts say the total U.S. export capacity is expected to more than triple from 3.0 billion cubic feet per day to 9.4 bcfd by the end of next year.