Cheniere Energy Lands 20-Year LNG Deal With China’s ENN
The deal is expected to support the liquefied natural gas exporter’s Sabine Pass liquefaction expansion project.
US liquefied natural gas (LNG) exporter Cheniere Energy has signed its second long-term gas contract in support of its Sabine Pass Liquefaction Expansion Project (SPL Expansion Project) in a week.
Under the sales and purchase agreement (SPA), China’s ENN Natural Gas will purchase 1.8 mtpa of LNG on a free-on-board basis for a purchase price indexed to the Henry Hub price, plus a fixed liquefaction fee. Additionally, LNG deliveries will commence in mid-2026, ramping up to 0.9 mtpa in 2027.
Delivery of the remaining 0.9 mtpa, which is subject to, among other things, a positive final investment decision with respect to the first train (Train Seven) of the SPL Expansion Project, will commence upon the start of commercial operations of Train Seven.
This is the second long-term SPA signed between Cheniere and ENN, with the long-term SPA signed in October 2021 initiating the first cooperation between two parties in the LNG business.
“At present, China is moving forward with the implementation of ‘carbon peaking and carbon neutrality,’ further accelerating the energy transformation, and China’s natural gas market is full of potential,” said Wang Yusuo, chairman of the board for ENN Natural Gas. “The signing of this long-term SPA marks another milestone in the establishment of good strategic cooperation between two parties, contributes to ENN Natural Gas’ establishment of an intelligent ecological operator in the field, provides customers with quality services and resources, and promotes the low-carbon transformation and upgrade of all industries,” he said.
Cheniere’s president and chief executive, Jack Fusco, said that the “SPA further supports China’s structural shift to natural gas as a growing primary energy source, powering its economy while enabling improved environmental performance with flexible, reliable, and cleaner LNG. This SPA accelerates Cheniere’s commercial momentum on the SPL Expansion Project, demonstrating the market’s need for additional LNG capacity and the value of Cheniere’s unique capability to tailor long-term solutions for customers worldwide.”
On 21 June, Cheniere announced that it had secured its second long-term SPA with Norway’s Equinor, under which Equinor will buy 1.75 mtpa of LNG from Cheniere Marketing on a free-on-board basis for a purchase price indexed to the Henry Hub price, plus a fixed liquefaction fee.
Half of the LNG volume will begin delivery in 2027, with the delivery of the second half subject to the favorable final investment decision of the SPL Expansion Project.
The Sabine Pass LNG terminal, located in Cameron Parish, Louisiana, first came online in 2016. The facility consists of six liquefaction trains with a total LNG production capacity of about 30 mtpa. The terminal also has operational regasification facilities that include five LNG storage tanks, vaporizers, and three marine berths.
The SPL Expansion Project includes up to three NGL trains with an expected total LNG production capacity of approximately 20 mtpa. In February 2023, Cheniere initiated a prefiling review process with the Federal Energy Regulatory Commission (FERC) under the National Environmental Policy Act.
The company is targeting project construction to begin in the fourth quarter of 2025, with a complete project in-service date expected for the second half of 2032, according to its filing documentation with FERC.