Chesapeake pens US LNG supply deal with Vitol

US shale gas producer Chesapeake Energy has signed a heads of agreement with Geneva-based trader Vitol to supply the latter with liquefied natural gas (LNG) from a liquefaction plant in the US.

Under the 15-year deal, Chesapeake Energy Marketing will supply up to 1 million tonnes of LNG per year to Vitol with the purchase price indexed to Japan Korea Marker (JKM).

Following the execution of the deal, Chesapeake and Vitol will jointly select the “most optimal liquefaction facility in the US” to liquefy the gas produced by Chesapeake for delivery to Vitol, according to a statement by Cheseapeake.

The agreement has a targeted start date in 2028.

Nick Dell’Osso, Chesapeake president and CEO, said today’s announcement “marks another important step on our path to ‘Be LNG Ready’, and is further recognition of the premium rock, returns, and runway of our advantaged portfolio and the strength of our financial position.”

“We look forward to entering into additional agreements as export capacity continues to come online,” he said.

In March, Chesapeake signed a similar deal with Geneva-based trader Gunvor.

Under this deal, Chesapeake will supply up to 2 million tonnes of LNG per year to Gunvor with the purchase price indexed to JKM for a period of 15 years.

After that, the two firms signed a non-binding deal with Texas-based Energy Transfer related to long-term LNG offtake from the latter’s proposed Lake Charles LNG export facility in Louisiana.

In addition to these deals, Chesapeake entered last year into a term gas supply agreement with the Golden Pass LNG terminal, owned by QatarEnergy and ExxonMobil.

On the other hand, Vitol’s LNG volumes rose last year as the company’s portfolio responded to increased demand from Europe.

In June, Vitol signed a three-year deal to offtake volumes from Indonesia’s Bontang LNG facility in East Kalimantan, while its 10-year deal with US firm Tellurian, the developer of the Driftwood LNG terminal, was terminated last year.

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