US LNG exporting giant Cheniere has signed a long-term supply deal with Norway’s Equinor.
Under the sales and purchase agreement, Cheniere Marketing will supply about 1.75 million tonnes per annum (mtpa) of LNG to Equinor on a free-on-board basis.
According to a statement by Cheniere, the Henry Hub-indexed deal includes a fixed liquefaction fee.
Delivery of half of the volume associated with the SPA will start in 2027, and delivery of the remaining half, which is subject to, among other things, a positive final investment decision with respect to the first train of the Sabine Pass expansion project, will start at the end of this decade, it said.
The term of the SPA is 15 years from the start of delivery of the full 1.75 mtpa of LNG volumes.
Deal supports Sabine Pass LNG expansion plans
This agreement brings the total volumes that Equinor has contracted with Cheniere up to around 3.5 million tonnes per year.
Cheniere and Equinor announced a SPA in June last year for about 1.75 mtpa with half of the volumes related to the additional liquefaction capacity at the Corpus Christi LNG terminal beyond the seven-train Corpus Christi Stage III project.
Sabine Pass currently has a capacity of about 30 mtpa following the launch of the sixth train in February last year, while Cheniere’s three-train Corpus Christi plant in Texas can produce about 15 mtpa of LNG and is undergoing expansion.
In February this year, Cheniere initiated the pre-filing review process with the US FERC for the proposed Sabine Pass Stage 5 expansion project.
The project will include up to three large-scale liquefaction trains, each with a production capacity of about 6.5 mtpa of LNG, a boil-off-gas (BOG) re-liquefaction unit with a production capacity of 0.75 mtpa of LNG, and two 220,000-cbm LNG storage tanks.
“We are pleased to expand our relationship with Equinor, one of Europe’s leading energy companies, building upon the SPA we executed last year,” Jack Fusco, Cheniere’s CEO said in the statement.
Fusco said this SPA is expected to provide further commercial support to the SPL expansion project, which the company continues to “rigorously” develop in order to meet the world’s growing demand for LNG.
Equinor increasing its role as LNG supplier
Equinor said in a separate statement that the LNG market is expected to grow “significantly” because of the role it will play in providing energy security as well enabling a transition to a cleaner energy mix in many markets.
With more US LNG in its portfolio, Equinor will increase its role as a supplier of natural gas in global markets while maintaining its position as the major supplier of natural gas to Europe, it said.
Equinor operates the 4.3 mtpa Hammerfest LNG export plant on the island of Melkoya, Norway.