Cheniere secures remaining commercial support needed to advance US expansion

Cheniere has reached a deal to triple the volumes of LNG tit will produce and market using gas supplied by upstream producer EOG Resources, the company said Feb. 24.

The amended agreement gives Cheniere the remaining commercial support it needs to advance its proposed midscale liquefaction expansion at the site of its Texas export facility, the company said.

In a statement, the biggest US LNG exporter said it remained confident it will be able to make a positive final investment decision on the up to 10 million mt/year expansion project in 2022. Financing still must be obtained.

EOG has agreed to sell approximately 420 MMcf/d to Cheniere's Corpus Christi Liquefaction Stage 3 facility for 15 years, with one third of the supply targeted to take effect upon completion of each of trains 1, 4 and 5, Cheniere said. That is up from 140 MMcf/d under the original deal signed in 2019.

The 2.55 million mt/year of LNG associated with the gas supply will be owned and marketed by Cheniere, up from 0.85 million mt/year of LNG under the original deal. EOG will receive a price based on the S&P Global Platts JKM, the benchmark price for spot-traded LNG delivered to Northeast Asia.

Another 300 MMcf/d of gas that EOG previously agreed to supply to Cheniere at a price indexed to the US Henry Hub will be used as feedgas. The amended agreement extends the gas supply portion of the deal to 15 years, Cheniere said.

EOG will continue to sell 140 MMcf/d of natural gas to Corpus Christi Liquefaction, a deal that began in 2020, until the commencement of the amended long-term agreements, Cheniere said.

Combined with 15-year supply agreements with US gas producer Apache and Canadian oil and gas producer Tourmaline, Cheniere now has 4.25 million mt/year of the Stage 3 expansion project's maximum expected capacity, or 42.5%, covered under long-term contracts that are specifically tied to that project.

Optionality at Cheniere's two existing terminals, Corpus Christi Liquefaction in Texas and Sabine Pass Liquefaction in Louisiana, will allow Cheniere to cover some of the remaining capacity from other offtake commitments that Cheniere has secured.

"This transaction is expected to provide the remaining commercial support needed to move forward with Corpus Christi Stage III, and we are focused on completing the outstanding steps required in order to reach FID this year," CEO Jack Fusco said in the Cheniere statement.