Cheniere Energy authorizes expansion at Texas LNG export plant

A sign of US LNG company Cheniere is seen at the registration counter at the International Conference & Exhibition on Liquefied Natural Gas (LNG2019) in Shanghai, China April 1, 2019. REUTERS/Stringer

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June 22 (Reuters) – Top US liquefied natural gas (LNG) exporter Cheniere Energy Inc (LNG.A) on Wednesday gave the financial go-ahead to an $8 billion expansion of its Corpus Christi, Texas, plant and signaled further expansions could be in store.

Its Corpus Christi expansion is the second US LNG export plant after Venture Global LNG Plaquemines facility to reach a final investment decision (FID) this year. First exports from the facility could begin in 2025.

Natural gas demand has soared globally, with European countries seeking to wean themselves off Russian energy after Moscow invaded Ukraine on Feb. 24. The improved outlook for LNG has sparked a wave of new long-term purchase agreements helping to advance some long-delayed projects.

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Venture Global LNG last month green lit the initial phase of its Plaquemines LNG export plant in Louisiana. That phase will produce 13.3 million tons per annum (MTPA) of supercooled gas. Other US LNG developers aim for FID later this year.

FID refers to the point when major financial commitments are made.

The next leg of Cheniere’s expansion may come quickly. The firm this month struck LNG deals with Chevron Corp and Equinor that allow it to provide LNG from existing or future processing plants, said finance chief Zach Davis.

“We’ve made reasonable strides in preparing ourselves to underpin the economics of our next project” after Stage 3, Davis said. Space is available at its two existing sites that could allow for future expansions, he said.

Construction giant Bechtel is on-site for Stage 3 work in Corpus Christi and officials “hope they can stay there and stay beyond” the current project, he said.

Stage 3 adds up to seven mid-scale liquefaction trains that would produce around 10.5 MTPA of LNG, equivalent to about 1.4 billion cubic feet per day of natural gas.

US oil company Chevron Corp on Wednesday (CVX.N) agreed to buy 2 MTPA of LNG from Cheniere beginning in 2026, the companies said. read more

As part of that agreement, Chevron paid a fee to terminate a LNG regasification contract signed when Sabine Pass was an LNG import facility.

Davis declined to say how much Chevron paid to end the contract.

To cover some of the cost of building Stage 3, a Cheniere unit closed on a roughly $4 billion Senior Secured Term Loan due 2029 and a $1.5 billion Working Capital Facility due 2027.

Cheniere said it will cover the remaining costs of the project, which includes a gas pipeline.

(This story corrects typo in surname in 6th paragraph)

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Additional reporting by Gary McWilliams in Houston; Editing by Sriraj Kalluvila, Louise Heavens, Mark Porter and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.


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