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Cheniere to sell Corpus Christi LNG under long-term contracts

Posted on September 19, 2012 at 7:01 am
by Bloomberg

Cheniere Energy Inc. (LNG) will sell as much as 90 percent of the output from its liquefied natural gas project in Corpus Christi, Texas, under long-term contracts.

The planned Corpus Christi site will produce 13 million to 15 million metric tons a year of LNG, Charif Souki, chief executive officer at Houston-based Cheniere, said today in an interview at a natural gas conference in Tokyo.

The company plans to follow the contracting model established at its Sabine Pass terminal in Louisiana, Souki said. Sixteen million tons of LNG from Sabine Pass, from a total output of 18 million tons, will be sold on long-term contracts of as long as 20 years, with the rest to be offered on the spot market, he said.

“Those are the volumes that we’re not sure we can produce year after year so these will remain in the spot market,” he said. The first spot cargoes from Sabine Pass will reach the market in late 2015 or early 2016, he said.

Cheniere’s Sabine Pass site is the first in the contiguous U.S. to be able to export LNG. The project is expected to cost about $5.6 billion.

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India: GAIL to Finalize USD 12 Billion Gas Deal

State-run gas company GAIL is just steps away from signing a 20-year contract for shipping two million tonnes of LNG a year from US east coast, The Times of India said, citing sources close to the development.

Value of this contract would be approximately $12 billion.

GAIL executives were in the US last week in order to give final touches to the deal, the newspaper said.

In December 2011, GAIL inked a $20 billion contract with Sabine Pass Liquefaction for 3.5 million tonnes of LNG annually.

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USA: Sierra Club Opposes Cameron LNG Export Plans

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The Sierra Club filed a formal protest to the U.S. Department of Energy (DOE) on Tuesday, challenging a proposal to export billions of cubic feet of domestic natural gas from a facility on Lake Charles in Cameron Parish, LA.

The Sierra Club’s protest challenges natural gas companies’ efforts to secure liquefied natural gas (LNG) export licenses without acknowledging its damaging effects. DOE is currently studying the effects of exporting as much as a fifth of the domestic gas supply, and the Sierra Club calls for similar studies of the public health and environmental damage caused by increased fracking.

The Sierra Club’s challenge contends that the Cameron export proposal would lead to increased air and water pollution in Louisiana and Texas and raise domestic natural gas prices. The filing calls for a full Environmental Impact Statement to study the extent of this proposed facility’s environmental damages before DOE makes any final decisions. Weighing these threats is particularly important because the oil and gas industry currently exploits numerous loopholes and exceptions in federal safeguards, putting the health and safety of Americans at risk.

This filing is the fifth protest the Sierra Club has brought before DOE and other regulatory bodies, opposing LNG export facilities. The other challenges were filed against Cove Point, MD, Sabine Pass, LA, Coos Bay, OR, and Freeport, TX.

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Feds approve Cheniere’s plan to export natural gas

imageApril 16, 2012 at 6:01 pm
by Jennifer A. Dlouhy

Houston-based Cheniere Energy on Monday cleared the final major hurdle to exporting natural gas when federal regulators approved the firm’s plan to build a plant in southwest Louisiana for liquefying the fuel.

The decision by the Federal Energy Regulatory Commission puts Cheniere on track to convert its existing Sabine Pass terminal for receiving liquefied natural gas by 2015 — a timeline that would make it the first LNG export facility in the lower 48 states. One operates now in Alaska.

The company aims to export up to 3.5 million tons per year from the facility in Lake Charles, La. Cheniere plans to build the liquefaction plant in two stages, adding 191 acres to the existing terminal’s space. The facility would still be able to receive liquefied natural gas from tankers.

“Obtaining approval from the FERC is one more milestone for our liquefaction project,” said Cheniere CEO Charif Souki. “We will now finalize the financing arrangements in order to commence construction.”

About half a dozen other companies, including Texas-based Freeport LNG, also are pursuing exports to take advantage of the glut of natural gas produced in the U.S. using horizontal drilling and hydraulic fracturing techniques that free hydrocarbons from dense shale rock formations.

Exports would allow natural gas producers and processors to capitalize on higher prices globally compared to the United States. In the U.S. Monday, natural gas futures settled just over $2 per million British thermal units after hitting 10-year lows last week.

In Cheniere’s case, the strategy is a bid to put its receiving terminal to work. The Sabine Pass terminal went online in 2009, just as U.S. natural gas production surged and killed the need for LNG imports.

When natural gas is cooled to 256 degrees below zero it becomes a liquid that tanker ships can transport. At its destination it is converted back into gas. Cheniere’s Sabine Pass terminal is outfitted with regassification and storage equipment now.

In approving Cheniere’s liquefaction plant plans, FERC also could also give a boost to U.S. producers with big natural gas portfolios.

But a rise in natural gas prices would increase consumers’ monthly bills and also would be bad news for chemical manufacturers that use natural gas as a building block to create other products.

Congressional Democrats have proposed legislation that would ban new LNG exports. Rep. Ed Markey, D-Mass., who is pushing a ban, said the expert terminals would mean sending U.S. natural gas to China and Europe 00 and “exporting our manufacturing jobs abroad along with the fuel.”

“America should exploit her competitive advantage with lower natural gas prices to create jobs in the United States, not export natural gas to create more profits for oil and gas companies,” Markey said.

And environmentalists have asked top Obama administration officials to require a broader review of the consequences of the surge in natural gas drilling that probably would result from selling the fuel overseas.

Critics fear hydraulic fracturing can contaminate water supplies and cause localized earthquakes. Sierra Club Executive Director Michael Brune said in a statement Monday that exports would increase production and hydraulic fracturing, “making a dirty fuel more dangerous and putting more American families in at risk.”

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USA: Cheniere to Raise Up to USD 4 Billion in Debt for Sabine Pass Liquefaction Project

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Cheniere Energy Partners said today that it has engaged eight financial institutions to act as Joint Lead Arrangers to assist in the structuring and arranging of up to $4 billion of debt facilities.

The proceeds will be used to pay for costs of development and construction of the liquefaction project at the Sabine Pass LNG terminal, to fund the acquisition of the Creole Trail Pipeline from Cheniere Energy, and for general business purposes. As previously disclosed, estimated capital costs before financing for the first two trains of the liquefaction project of $4.5 billion to $5.0 billion are expected to be funded from a combination of debt and equity financings.

The eight Arrangers are The Bank of Tokyo-Mitsubishi UFJ, Ltd., Credit Agricole Corporate and Investment Bank, Credit Suisse Securities (USA) LLC, HSBC, J.P. Morgan Securities LLC, Morgan Stanley, RBC Capital Markets, and SG Americas Securities, LLC.

Obtaining financing is one of the last steps to complete before proceeding with the construction of the first two liquefaction trains being developed at the Sabine Pass LNG terminal,” said Charif Souki, Chairman and CEO. “We have engaged an experienced group of financial institutions as our core banking group and look forward to completing the financing for the project in due course.”

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