US project developer Commonwealth LNG has joined forces with trader Gunvor to launch an offtake tender for volumes from its proposed liquefaction plant in Cameron, Louisiana.
The firm announced the formal process to solicit bids to reserve offtake from its 8.4 million tons per annum plant on Monday.
Commonwealth LNG claims this is the first ever tender process in which prospective LNG customers can secure future term supply at volumes, pricing and durations of their choosing through competitive bidding.
The firm offers LNG under tolling, free on board (FOB) but also delivered at place (DAP) offtake agreements.
Commonwealth founder and CEO Paul Varello said the “innovative” approach to selling LNG benefits the project as well as potential buyers.
“We believe this process offers a mutually advantageous, low-risk solution for buyers to address their long-term needs while allowing Commonwealth to advance our project expeditiously to meet market demand,” he said.
Gunvor has already committed to take offtake
Gunvor backs the tender as the duo have already a strategic agreement under which the trading firm supports Commonwealth in securing binding LNG offtake and gas supply agreements for the planned facility.
The trading firm has committed to take up to 3 MTPA of LNG offtake from the project. In addition, as part of the tender, Gunvor will enable the offering of DAP basis to customers desiring this option, the statement said.
Furthermore, the utilization of Gunvor’s LNG portfolio will allow the offering to provide firm LNG supply obligations, which will mitigate greenfield project supply risk and/or allow deliveries of LNG prior to the start-up of the Commonwealth LNG project to buyers who require earlier supplies, it said.
Moreover, Commonwealth has retained LNG advisory firm Poten & Partners to manage the tender process.
The tender calls for confirmations of interest by mid-February and submission of bids by early April 2021.
Commonwealth said it would evaluate each bid based on the bidder’s requested volume, price, contract tenor and credit.
The firm expects to award contracts by June of this year.
FID in Q1 of 2022
Commonwealth has pushed the final investment decision for about one year.
The firm now expects the project to achieve FID in the first quarter of 2022, with the first cargo expected in the second quarter of 2025.
Commonwealth is implementing an accelerated construction schedule that would allow the project to be built in three years using a predominantly modular approach. This includes major components being fabricated offsite.