LNG

Cheniere Energy, the largest US LNG exporter from its six-Train Sabine Pass plant in Louisiana and its three-Train facility at Corpus Christi in Texas and with expansion plans, has signed another long-term sale and purchase agreement with PetroChina.

PetroChina is the Hong Kong-listed unit of China National Petroleum Corp. (CNPC) and has a stake in Shell’s Canada LNG project in British Columbia.

CNPC itself additionally has shareholdings in two Russian Arctic LNG projects and in ExxonMobil’s stalled Mozambique LNG export venture.

Under the SPA with Cheniere, PetroChina subsidiary PetroChina International (PCI) has agreed to purchase up to 1.8 million tonnes per annum of LNG from the Cheniere Marketing unit on a free-on-board basis whereby the Chinese provide their own shipping.

Deliveries under the SPA will begin in 2026 and reach the full 1.8 MTPA in 2028 and they will continue through 2050.

The purchase price for LNG under the SPA is indexed to the Henry Hub price, plus a fixed liquefaction fee.

Expansion volumes

Half of the total volume, or about 900,000 tonnes, is subject to Cheniere making a positive final investment decision to construct additional liquefaction capacity at the Corpus Christi plant beyond the expansion with seven mid-scale Trains already approved and known as the Corpus Christi Stage 3 Project.

“We are pleased to build upon our existing and successful long-term relationship with PetroChina and sign our first LNG contract that crosses over into the second half of this century,” said Jack Fusco, Cheniere’s President and Chief Executive.

“PetroChina is a leading energy company in one of the largest and fastest growing markets for LNG,” added Fusco.

“This SPA increases Cheniere’s long-term sales to PetroChina to approximately 3 MTPA, and we are proud to support China’s progress toward a lower-carbon future with our reliable, cleaner burning LNG,” declared the Cheniere CEO.

The Executive Chairman of PCI, Tian Jinghui, also commented on the LNG agreement with the Houston-based company.

“Natural gas continues to play a vital role in enabling energy transition in China,” said Tian.

“We are pleased to further expand our cooperation with Cheniere in delivering LNG, one of the cleanest fuel choices to our millions of customers for many years to come,” he added. 

Pieridae Energy, the developer of the Goldboro LNG project in the Canadian Atlantic province of Nova Scotia, said it had negotiated extensions of the key deadlines under its 20-year supply agreement with German utility Uniper.

These include expected commercial deliveries of shipments to Uniper to start between November 30, 2024 and May 31, 2025.

The Calgary-based company is seeking to build a liquefaction plant with an initial two Trains northeast of the Nova Scotia capital, Halifax.

Pieridae added that it had also extended to September 30, 2020, its deadline for making a financial investment decision (FID) for the Goldboro plant. The FID had previously been expected by mid-2020.

The 20-year agreement with Uniper is for 5 million tonnes per annum of LNG, half of the plant’s expected first phase capacity.

“These extensions allow us to complete the work needed to make a final investment decision for the Goldboro project,” said Pieridae Chief Executive Alfred Sorensen.

The company said it had most of the necessary Canadian federal and provincial regulatory permits to proceed.

Pieridae awarded a contract in April 2019 to US energy engineering company KBR to perform a review of an amended version of a previously prepared front-end engineering and design study of the Goldboro plant.

KBR will also conduct an “open-book estimate” necessary for an engineering, procurement, construction, and commissioning agreement with the intention of entering into an EPC contract by the time of the FID on Goldboro.

“We continue to have ongoing discussions with KBR that will ultimately lead to finalized designs and fixed costs for the project. We expect the vast majority of that work to be completed near the end of 2019, which will move us closer to FID,” explained Sorensen

Pieridae additionally signed an agreement in June 2019 with Shell Canada Energy to acquire all of Shell’s midstream and upstream assets in the southern foothills of Alberta province to boost its LNG feed-gas reserves.

The purchase price of the Shell Alberta assets is C$190 million (US$145M), including C$175M in cash to be raised by Pieridae through the issuance of debt and equity.

The balance will be in the form of the issuance of Pieridae common shares to Shell with an aggregate value of C$15M. Its shares are on the venture list of the Toronto Stock Exchange for small commodities companies.

The whole deal is expected to be finalized in the third quarter of 2019.

“Our recent announcement that we will be acquiring key Shell assets in the Alberta Foothills helps us secure much of the remaining conventional natural gas supply needed for the first Train at Goldboro,” said Sorensen.

“This is Eastern Canada’s only LNG facility with the majority of its permits, a pipeline route and an anchor customer. Goldboro LNG will create thousands of Canadian jobs and establish a solid global market for Canadian energy for years to come,” stated the CEO.

Shell has helped Goldboro LNG move forward as its own LNG Canada project in British Columbia survives as the only large-scale venture in BC from a dozen previously proposed.

Shell’s plans will cost C$40 billion (US$30.2Bln) to implement compared with the C$10Bln projected cost of the Nova Scotia plant.

The conventional natural gas assets Pieridae controls are expected to allow the company to access up to US$1.5 billion in credit support from the German government to develop these upstream assets as part of the Goldboro project.