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Cheniere reached LNG supply deal with New Fortress affiliate over summer: DOE


Some 600,000-1 million mt/year to be delivered FOB

Six-year agreement was not previously announced

  • Author
  • Harry Weber
  • Editor
  • Richard Rubin
  • Commodity
  • Electric Power LNG Natural Gas Shipping

Cheniere Energy reached a six-year supply deal over the summer with an affiliate of New Fortress Energy tied to the US LNG exporter's Corpus Christi Liquefaction terminal in Texas, according to a recently released letter to the US Department of Energy that was previously filed under seal.

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Under the terms of the sale and purchase agreement with Cheniere's marketing unit, a range of approximately 600,000-1 million mt/year of LNG is to be delivered to NFE North Trading free on board from the Cheniere terminal starting this year. The agreement also allows LNG to be delivered by Cheniere to NFE from other sources, including from Cheniere's Sabine Pass liquefaction terminal in Louisiana.

The agreement, first reached in December 2020, was amended in July to include an additional year and higher volumes, according to the letter, dated Aug. 11.

The terms of the contract, beyond its length, volume and delivery basis, were not disclosed in the letter. Cheniere did not publicly announce the transaction at the time it was reached. That trend has become increasingly more common as fixed-price term commercial activity among US LNG exporters and developers has picked up in recent months, amid high spot LNG prices in destination markets in Europe and Asia. On Dec. 21, 2020, the day after the initial agreement between Cheniere and New Fortress was signed, New Fortress issued a statement saying it had signed two LNG supply agreements to support its natural gas and electricity businesses in Puerto Rico, Mexico, and Nicaragua. At the time, it did not name the suppliers.

A Cheniere spokesperson declined to comment Dec. 14.

New Fortress Energy is a growing player in supplying LNG to power plants and industrial customers in the Caribbean and Latin America.

On July 14, a day before the amended agreement with Cheniere was reached, New Fortress announced that it had begun commercial operations at a receiving terminal on Mexico's Pacific Coast.

The new receiving and regasification terminal is at the port of Pichilingue, on the southern end of Baja California along the Gulf of California, which empties into the Pacific Ocean. The facility, located in a region where the industry is pursuing new export opportunities, was designed to allow larger LNG tankers to transfer supplies into storage containers for more efficient delivery onshore.

New Fortress has agreed to supply via its receiving terminal 20,000-40,000 MMBtu/d of LNG to two power plants operated by Mexican state-owned electric utility CFE: CTG La Paz and CTG Baja California Sur.

Other operations

Along with its operations in Jamaica and Brazil, New Fortress is positioning itself as a provider of clean energy solutions to smaller LNG customers than the big end-users in Europe and Asia. Moving LNG by containers, trucks and rail are part of its endeavors to enable more power producers to switch from oil-based fuels to natural gas.

In the US, New Fortress has talked about a project to move LNG by rail from a proposed liquefaction plant in the Marcellus shale region in Pennsylvania to a small export facility on the East Coast.

Cheniere has also signed supply deals this year with Canada's Tourmaline, a subsidiary of Swiss commodity trader Glencore, China's Sinochem and an affiliate of China's ENN Natural Gas. Each of those deals was announced by Cheniere at the time it was reached.

In November, it was disclosed via a letter to the DOE that Cheniere reached a medium-term supply deal over the summer with French utility Engie tied to Corpus Christi Liquefaction. That deal was not announced by either company at the time it was signed.