Summary
Cheniere Energy, Inc. (LNG) announced a significant development on September 3, 2004, with its wholly owned subsidiary, Sabine Pass LNG, L.P. ("Cheniere SP"), entering into a terminal use and related agreement with Total LNG USA, Inc. This agreement grants Total the right to 1 billion cubic feet per day (Bcf/d) of LNG regasification capacity for a 20-year term, commencing no later than April 1, 2009. The terms include an initial tariff and provisions for Total to potentially adopt more favorable pricing from future third-party agreements. This deal represents a crucial step for Cheniere's Sabine Pass LNG terminal project, securing a major customer and demonstrating commercial viability. The agreement is contingent on Total making initial payments and meeting certain regulatory and financing milestones, with termination rights for Total if these are not met by mid-2005. Investors should monitor the progress of these conditions and the overall development of the Sabine Pass facility.
Key Highlights
- 1Cheniere SP secures a 20-year terminal use agreement with Total LNG USA, Inc. for 1 Bcf/d of regasification capacity.
- 2The agreement is set to commence no later than April 1, 2009.
- 3Total will pay a tariff of $0.32 per million British thermal units for the service.
- 4Total has an option to match more favorable pricing from future third-party terminal use agreements.
- 5Total has the option to proceed by making a $10 million initial payment by November 15, 2004.
- 6Further payments and regulatory approvals are required, with termination rights for Total if conditions aren't met by June 30, 2005.