Total signs 20-year deal to buy gas from new US Gulf export plant

[Capt. Hong]

Total signs 20-year deal to buy gas from new US Gulf export plant

• Monday 17 December 2012, 15:05
• by Hal Brown

CHENIERE Energy Partners today sold around 2m tonnes per year of liquefied natural gas from its Sabine Pass export plant to energy giant Total.

Total will buy the LNG on a free-on-board basis, with the LNG loaded onto Total’s vessels at a price linked to the US gas benchmark price Henry Hub.

The agreement is for 20 years, with an option to extend another 10 years.

Sabine Pass export plant in Louisiana will be the first of the wave of US export projects to start producing cargoes.

Cheniere issued notice in August to begin construction on the first two liquefaction trains of the $5.6m project. The first train is scheduled to start producing LNG for export on vessels to international markets in 2015, with the second train starting operations six to nine months later.

India, the UK and Spain have all signed contracts for cargoes from Sabine Pass, reducing dependence on gas from the Middle East Gulf.

New trade patterns will emerge as the US exports gas to Asia and Europe, offering vital new supplies for the growing LNG shipping industry.

Critics, however, say the impact of US exports will be smaller than many think. They say US gas prices could rise, reducing the attractiveness of shipping gas from the US to Asia.

Sabine Pass will start construction on a third and fourth train in 2013. A fifth train is planned.

“Total, one of our long-standing customers at Sabine Pass, will become the next foundation customer for LNG exports as Sabine further expands its liquefaction project,” said Cheniere chief executive Charif Souki.

Around five years ago, the US was geared up to becoming an importer of LNG.

However, the subsequent shale gas boom meant the US did not require imports and instead turned its attention to exports of its newfound gas glut.

Some US industry groups do not want to export the gas to international markets, saying it should be used as cheap feedstock in the thriving domestic petrochemical sector.