Gas Natural Fenosa Deals with Cheniere Energy to Buy US Shale Gas Sourced LNG

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Gas Natural Fenosa has entered into a deal with US based Cheniere Energy to buy 3.5 million tonnes per year (mtpa) of liquefied natural gas from the US based company’s Sabine Pass facility by 2016.

Gas Natural Fenosa will pay Cheniere about $454 million per year for use of the terminal, construction of which could begin in 2012. It will buy LNG at a 15 percent premium to U.S. benchmark futures at Henry Hub.

The move marks the second large deal for Cheniere, taking it a step closer securing construction financing that would allow it to export U.S. shale gas globally.

In October, Cheniere announcing that it had signed a 20-year agreement to supply liquefied natural gas from US shale gas with BG Group, under which it would export 3.5 million tonnes a year of liquefied natural gas from Sabine Pass terminal, at a cost of 115% the US price plus $2.15 per million British therms.

Cheniere plans to refit its existing Sabine Pass gas import terminal in Louisiana to be able condense to and ship over 800 billion cubic feet of gas per year of domestically produced supply.  The project would be the first bi-directional LNG processing facility capable of importing and exporting LNG.

Sabine Pass opened in 2008 as a terminal to take in natural gas shipments from overseas. Fearing a US gas shortages, Cheniere and other companies had built gas-import terminals during the past decade.

However, a surge in natural gas production from shale gas fields changed US market dynamics, reducing the need for imports.

In September 2010, Cheniere received US government permission to ship gas to 15 countries with which the US had free trade agreements. An additional authorization in May 2011, extended permission to all US trading partners.

Gas Natural Fenosa is one of the leading multinational companies in the gas and electricity sector, operating in more than 25 countries,. It is the largest integrated gas and electricity company in Spain and Latin America, leading the natural gas sales market in the Iberian Peninsula, and it is the biggest distributor of natural gas in Latin America.

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Posted on November 22, 2011, in LNG, Louisiana, Natural Gas, Sabine Pass and tagged , , , , , , , , , . Bookmark the permalink. 3 Comments.

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