Cheniere signs new LNG contract

A Cheniere Energy Partners subsidiary has signed a 20-year agreement to supply liquefied natural gas from its proposed Sabine Pass export facility in southwest Louisiana to Gas Natural Fenosa, a multinational natural gas and electricity provider based in Spain.

Louisiana Department of Natural Resources Secretary Scott Angelle said this week that the sale and purchase agreement is reportedly worth about $9 billion.

“Opening Louisiana’s energy industry to new markets and new consumers means new demands and greater need for supply,” Angelle said. “That can drive growth in the energy exploration, production and transportation industry, in support industries, and in commercial and retail industries that will reap the benefit of workers taking advantage of new jobs and opportunities for greater income,” he said.

Gas Natural Fenosa operates in more than 25 countries and has more than 20 million customers.

This is the second deal that Cheniere subsidiary Sabine Pass Liquefaction LLC has signed in less than a month. It announced a late-October export supply agreement with BG Gulf Coast LNG LLC for about half the facility’s initial capacity.

“With this agreement and the previously announced agreement with BG Gulf Coast LLC, we have reached our contract capacity target for the first phase of our project,” Charif Souki, Cheniere’s chairman and CEO, said in a new release this week. “We will now proceed towards making a final investment decision in order to start construction on the first two liquefaction trains in early 2012.”

Sabine Liquefaction is developing capacity for 9 million metric tons per year of LNG in the first phase of its project.

Gas Natural Fenosa has agreed to purchase 3.5 million metric tons per year of LNG. The Fenosa and BG contract give Cheniere the 7 million metric tons per year needed to construct the first two liquefaction units, the company said.

The Sabine Pass liquefaction project is being designed for up to four modular LNG units, each with a capacity of about 4.5 million metric tons per year.

The project is expected to be constructed in phases, with each LNG unit starting operations about six to nine months after the previous one, the company said. LNG exports could begin as early as 2015.

Sabine Liquefaction has entered a multi-billion dollar engineering and construction contract with Bechtel Oil, Gas and Chemicals.

Cheniere estimates that the project will create more than 3,000 construction jobs at peak employment, and 100 permanent workers will be required to operate the liquefaction facilities.

The liquefaction units will be built next to the existing facilities at the Sabine Pass LNG terminal, whose five tanks can store the equivalent of 16.9 billion cubic feet of natural gas.