Cheniere Energy Partners, L.P. (NYSE Amex: CQP) says that its subsidiary, Sabine Pass Liquefaction, LLC has entered into its first liquefied natural gas sale and purchase agreement with BG Gulf Coast LNG, LLC, a subsidiary of BG Group plc, under which BG has agreed to purchase 3.5 million tonnes per annum (mtpa) of LNG.
Sabine Liquefaction is planning to develop the ability to produce 9 mtpa of LNG in the first phase of its project at the Sabine Pass Terminal owned by Cheniere Partners. On May 20, 2011, Sabine Liquefaction received authorization from the U.S. Department of Energy to export up to 16 mtpa of LNG destined to all countries with which trade is permissible.
Under the agreement, BG will pay Sabine Liquefaction a fixed sales charge for the full annual contract quantity and will also pay a contract sales price for LNG purchases based on the applicable Henry Hub index traded on the New York Mercantile Exchange. LNG will be loaded onto BG's vessels. The agreement has a term of twenty years commencing upon the date of first commercial delivery, and an extension option of up to ten years.
LNG exports are expected to commence as early as 2015. The agreement is subject to conditions that include Sabine Liquefaction's receiving regulatory approvals, securing necessary financing arrangements and making a final investment decision to construct the liquefaction facilities.
"BG is one of the largest participants in the global LNG markets and will be a strong foundation customer for our Sabine Pass liquefaction project," said Cheniere Energy Partners Chairman and CEO, Charif Souki, Cheniere Energy Partners Chairman and CEO. "Entering into this agreement is a significant milestone for our project and we look forward to finalizing additional commercial agreements and proceeding with the development of the first two trains."
Cheniere Partners owns 100 percent of the Sabine Pass LNG receiving terminal located on the Sabine Pass Channel in western Cameron Parish, Louisiana. The Sabine Pass terminal has regasification and send-out capacity of 4.0 billion cubic feet per day (Bcf/d) and storage capacity of 16.9 billion cubic feet equivalent (Bcfe). Cheniere Partners is developing a project to add liquefaction and export capabilities to the existing infrastructure at the Sabine Pass LNG terminal.
As currently contemplated, the Sabine Pass Liquefaction Project is being designed and permitted for up to four modular LNG trains, each with a nominal capacity of approximately 4.5 mtpa. It is anticipated that LNG export from the Sabine Pass LNG terminal could commence as early as 2015. The Liquefaction Project is expected to be constructed in phases, with each LNG train commencing operations approximately six to nine months after the previous train. Commencement of construction is subject to regulatory approvals and a final investment decision contingent upon Cheniere Partners obtaining satisfactory construction contracts and entering into long-term customer contracts sufficient to underpin financing of the project.
October 26, 2011
Cheniere Energy Partners signs LNG export agreement with BG subsidiary
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