Cheniere signs LNG cargo deals with France's GdF

Friday, 27 April 2007

The US LNG company made the announement at the LNG 15 Conference in Barcelona, Spain.

In addition, Cheniere and GDF signed an LNG Sales & Purchase Agreement for Cheniere to purchase seven LNG cargoes from GDF during 2008.

France is Europe's second-largest purchaser of LNG after Spain and Gaz de France is known for its slick marketing strategy, including Atlantic Basin spot trading, arbitrage, cargo swaps and LNG-for-pipeline gas transactions.

Houston-based Cheniere is developing a platform of three, 100 percent-owned, onshore LNG receiving terminals along the US Gulf Coast.

The terminals are Sabine Pass, sited along the Sabine Pass River on the border between Texas and Louisiana, in Cameron Parish; at Corpus Christi on the Texas coast; and Creole Trail, located along the Calcasieu River Channel in central Cameron Parish, Louisiana.

Cheniere also has a 30 percent stake in Freeport LNG, also located in Texas, and which at the end of the year will be the first land-based US LNG terminal to come on stream in almost 30 years.

The three wholly-owned Cheniere terminals will have an aggregate send-out capacity of 9.9 billion cubic feet of natural gas per day.

Cheniere says it plans to leverage its terminal platform by pursuing related LNG business opportunities both upstream and downstream of the terminals.

The Transatlantic Option Agreements give Cheniere the option to sell LNG at agreed upon UK National Balancing Point index-based prices to GDF Trading, and GDF Trading the option to sell LNG at agreed New York Mercantile exchange index-based prices to Cheniere.

Cheniere and GDF will be entitled to sell one cargo per month to the other party on an ex-ship basis at the at the Isle of Grain LNG terminal, located southeast of London, and the Cheniere Sabine Pass terminal.

The agreements have a term of 15 years commencing on the later of 1) the commercial start-up of Sabine Pass, which is planned for second quarter of 2008, or 2) the first expansion of the Isle of Grain LNG receiving terminal which is planned for the fourth quarter of 2008.

Under the 2008 LNG Sales & Purchase Agreement, GDF will sell up to seven cargoes to Cheniere at agreed Nymex index-based prices on an ex-ship basis. Cheniere has granted GDF the right to cancel delivery of certain cargoes subject to the payment of a cancellation fee.

The companies have also entered into a Master Ex-ship LNG Sales Agreement that sets forth the terms and conditions of the Transatlantic Option and the LNG Sales & Purchase agreements. The transactions remain subject to approval by each company's board of directors.

Cheniere Chairman and Chief Executive Charif Souki said of the transactions: "The increasing connectivity between the European and North American gas markets will require new business models and creative agreements.

"Gaz de France's position in Western Europe complements Cheniere's position in the Gulf of Mexico to provide both companies increased flexibility and access to premium markets. We are delighted by this important strategic step and look forward to continuing to develop a strong relationship with Gaz de France," Souki said

France is Europe's second-largest purchaser of LNG after Spain and Gaz de France is known for its slick marketing strategy, including Atlantic Basin spot trading, arbitrage, cargo swaps and LNG-for-pipeline gas transactions.

"As the largest European LNG operator, Gaz de France is consolidating its access to the Gulf of Mexico thanks to these agreements," asaid Jean-Marie Dauger, Gaz de France's Chief Operating Officer.

"The Group is now present in all the major LNG markets and its fleet - which includes the two largest LNG carriers in the world - enables it to proceed with arbitrages on the final destination of its cargoes. This operation is all the more promising as Cheniere is substantially developing its regasification capacity, thereby offering even better access to the American market," he said.