Cheniere extends, expands EOG supply agreement
US LNG developer Cheniere Energy said February 24 it had amended a long-term integrated production marketing (IPM) gas supply arrangement with producer EOG Resources, extending the term and tripling the volume of LNG associated with the gas supply.
The transaction is expected to complete the commercialisation of Cheniere’s Corpus Christi Stage III (CCL III) project in Texas, Cheniere CEO Jack Fusco said.
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“The extension and increase of our original IPM transaction further leverages our infrastructure platform, capabilities, and operations in Corpus Christi,” he said. “This transaction is expected to provide the remaining commercial support needed to move forward with Corpus Christi Stage III, and we are focused on completing the outstanding steps required in order to reach FID this year.”
Under the amended terms of the IPM, EOG has agreed to sell 420,000mn Btu/day of natural gas to CCL III for 15 years, with a third of the supply targeted to commence upon the completion of each of Trains 1, 4 and 5 at the project. The LNG associated with this sale – about 2.55mn mt/yr – will be owned and marketed by Cheniere, with EOG receiving a base price based on the Platts Japan Korea Marker (JKM).
In addition, the previous 2019 gas supply agreement, under which EOG will sell 300,000mn Btu/day to CCL III at a price indexed to Henry Hub, has been extended to 15 years.
Taken together, the amendments provide for EOG to supply 720,000mn Btu/day of gas to CCL III for 15 years, with the term to commence on start-up at the project.
EOG will also continue to sell 140,000mn Btu/day to Cheniere until the commencement of the amended long-term agreements. The LNG associated with that supply – about 0.85mn mt/yr – is also owned and marketed by Cheniere, with EOG paid a base price also based on JKM.
CCL III comprises seven midscale liquefaction trains with a total nominal expected capacity of more than 10mn mt/yr.