LNG

Cheniere Energy, the owner of the Sabine Pass liquefaction and export plant in Louisiana and the Corpus Christi facility in Texas, has signed another long-term LNG sale and purchase agreement with Equinor, the Norwegian LNG and pipeline gas supplier to Europe.

Under the latest SPA, Equinor has agreed to purchase about 1.75 million tonnes per annum of LNG from the Cheniere Marketing unit of the Houston, Texas-based company on a free-on-board (FOB) basis for a purchase price indexed to the Henry Hub price, plus a fixed liquefaction fee.

Delivery of half of the volume associated with the SPA will commence in 2027 and delivery of the remaining half, which is subject to a positive Final Investment Decision with respect to the first Train of the Sabine Pass Liquefaction Expansion Project, will start at the end of the 2020s. 

The Sabine Pass deal follows an SPA signed with Equinor in June 2022, also for 1.75 MTPA of volumes, from the Corpus Christi LNG expansion.

Half of the Corpus Christi volumes, or about 900,000 tonnes, were subject to Cheniere making a positive FID to construct additional liquefaction capacity at the Corpus Christi facility beyond the seven-Train Corpus Christi Stage III Project

The terms of the Sabine SPA is 15 years from the commencement of delivery of the full 1.75 MTPA of LNG volumes to Equinor, which also operates its own LNG export plant in northern Norway at Hammerfest, supplying European import terminals.

The Equinor Hammerfest plant in Norway had initially been built and started in 2007 to send LNG cargoes to the US before the shale-gas boom began the liquefaction and export build-out in the Lower 48 states of the US.

Project

The Sabine expansion will comprise three large-scale liquefaction Trains, each with capacity of 6.5 MTPA, a boil-off-gas re-liquefaction unit with output of 750,000 tonnes a year and two 220,000 cubic metres capacity storage tanks.

Cheniere has engaged US engineering company Bechtel Energy to complete a front-end engineering and design study of the Sabine Pass project.

“We are pleased to expand our relationship with Equinor, one of Europe’s leading energy companies, building upon the SPA we executed last year,” said Jack Fusco, Cheniere’s President and Chief Executive.

“This SPA underscores Cheniere’s and Equinor’s shared vision of an energy future built upon reliable, flexible, and cleaner energy solutions,” Fusco stated.

“It will provide further commercial support to the SPL Expansion Project, which we continue to rigorously develop in order to meet the world’s growing demand for secure, long-term energy supplies and the economic and environmental benefits of Cheniere’s LNG,” the CEO added. 

Helge Haugane, Equinor’s senior vice president for Gas & Power, said he was very pleased to sign the long-term agreement with Cheniere.

“Europe will need natural gas to ensure flexible energy on demand to support the build-out of more intermittent renewables and LNG will play an important role. In other markets, for example in Asia, demand for LNG is expected to grow as a solution to energy security,” stated Haugane.

FERC process

The Cheniere group in May 2023 entered the pre-filing review process with respect to the Sabine expansion with the Federal Energy Regulatory Commission under the National Environmental Policy Act.

Cheniere has also recently signed a long-term SPA with the South Korean utility company, Korea Southern Power (KOSPO) for the Sabine expansion.

KOSPO agreed to purchase 400,000 tonnes per annum of cargoes, which will be delivered ex-ship whereby Cheniere will supply the transportation.

Cheniere said it would begin delivering a smaller amount to the Koreans in 2024, though the full SPA runs from 2027 through to 2046.

The Houston company is additionally progressing with the expansion at the Corpus Christi plant where three liquefaction Trains currently produce 15 MTPA.

The Stage 3 expansion is adjacent to the existing plant and consists of seven mid-scale Trains with an total production capacity of over 10 MTPA.

It is also proceeding with an additional Corpus Christi expansion known as the Corpus Christi mid-scale Trains 8 and 9 project.

The Norwegian Ministry of Petroleum and Energy has issued details of the 2022 oil and natural gas exploration and production licence round for allocations in predefined areas (APA) on the Norwegian Continental Shelf and with the application deadline set for Monday 12th of September 2022.

The Norwegian Ministry of Petroleum and Energy has updated its estimate of projected European natural gas sales in 2022 to about 8 percent higher than last year and set to be bolstered by the restarting Hammerfest LNG export plant in Northern Norway and with the volumes helping to offset declining Russian gas sales.

Norwegian energy and LNG producer Equinor has been awarded 26 new production licences by Norway’s Ministry of Petroleum and Energy in the latest award in predefined areas (APA) with 12 licences as operator and 14 licences as partner.

“Exploration is essential to secure continued value creation on the Norwegian Continental Shelf (NCS),” said Jez Averty, Equinor’s senior vice president for subsurface in Exploration and Production.

“The APA rounds are very important to us and we are pleased about the award of new production licences,” added Averty.

Equinor’s Hammerfest LNG plant on Melkoya island in northern Norway is currently closed after a fire occurred on September 28 2020.

The facility, which supplies European LNG terminals, is expected to re-open in the current first quarter of 2022 after repairs have been completed.

Equinor said that the 26 production licences are divided as follows: 12 in the North Sea, 10 in the Norwegian Sea and four in the Barents Sea, from where Hammerfest LNG receives its feed gas for processing.

“Equinor’s ambition is to transform the NCS from an oil and gas province to a low-carbon energy province,” the company explained.

“In this transformation, oil and gas play a crucial role, both in delivering energy that is critical to society, but also through the expertise, technology and capital needed to realise the transformation,” added Equinor.

Averty said he believed in the NCS and that there is still substantial value to find and develop.

“A good example is our latest discovery, Toppand, which was awarded in the 2011 APA,” he added.

“This discovery shows the potential for value creation on the NCS, even in mature areas, through use of new information and modern exploration technology,” he stated.

“At least 80 per cent of our exploration resources and investments will be concentrated around existing infrastructure - so-called near-field or infrastructure-led exploration,” declared the Equinor executive.

During 2022, Equinor plans to take part in around 25 exploration wells, mainly near existing infrastructure.

Most of the wells will be drilled in the North Sea, some in the Norwegian Sea and a few in the Barents Sea.

Equinor, the Norwegian oil and gas company, said the Hammerfest LNG export plant that suffered a fire last month will likely be closed until October 2021 for repairs, cutting more than 60 cargoes from the European market for the next year.

Equinor, the operator of the Hammerfest LNG export plant on Melkoya Island in Northern Norway, confirmed that the facility had suffered a serious fire on September 28 shortly after re-opening following a previous closure as a safety measure because of a gas leak.