Cheniere Signs Term LNG Deal with Vitol

Cheniere Energy announced September 17 its marketing subsidiary has agreed a long-term LNG supply deal with international oil trader Vitol.

Under the sale and purchase agreement, Vitol will buy some 0.7mn metric tons per year of LNG from Cheniere Marketing on a free on board basis for a term of roughly 15 years beginning in 2018. The purchase price is indexed to a monthly Henry Hub price, plus a fee.

“We are pleased to announce this long-term SPA with Vitol, one of the fastest growing players in the global LNG market,” said Cheniere CEO Jack Fusco.

Vitol CEO Russell Hardy added: “We are delighted to be working with Cheniere, a pioneer in US liquefaction. Vitol is committed to the long-term development of the LNG market."

Cheniere owns and operates the Sabine Pass LNG export terminal in Louisiana where it is preparing to start up its fifth train, but is also developing another such large export complex at Corpus Christi, Texas. 

Vitol regularly supplies spot LNG markets such as Pakistan and is among the larger non-producing LNG traders, with worldwide reported 2017 LNG sales of 7.4mn mt, equivalent to 2.5% of global LNG trade. It was founded in Rotterdam but its main offices are now in Geneva, Houston, London and Singapore. 

By inking a deal with a trader, Cheniere may be seeking greater flexibility in where its cargoes go. Earlier this year it inked deals to supply PetroChina, a few months before a US-China trade spat led to Beijing  threatening the imposition of tariffs on US LNG imports. This is not however Cheniere's first such deal to supply LNG to an international trader: in January 2018 it signed an SPA to supply Trafigura  with 1mn mt over 15 years, starting 2019. (Banner photo credit: Cheniere)