Summary
Cheniere Energy, Inc. (LNG) announced a significant development on May 30, 2014, with its subsidiary Corpus Christi Liquefaction, LLC (CCLNG) entering into a 20-year Liquefied Natural Gas (LNG) Sale and Purchase Agreement (SPA) with IBERDROLA, S.A. (IBE). This agreement positions IBE to purchase approximately 0.76 million tonnes per annum of LNG from Cheniere's Corpus Christi liquefaction facility, commencing with the second liquefaction train. The SPA also includes provisions for bridging volumes from the first train, providing immediate revenue potential. The pricing mechanism is structured with a base price of $3.50 per MMBtu, plus 115% of the monthly Henry Hub natural gas futures contract price, with a portion subject to annual inflation adjustments. The agreement includes flexibility for IBE to suspend deliveries, though payment obligations for the fixed portion remain. This SPA is a crucial step in advancing Cheniere's Corpus Christi project, contingent on regulatory approvals, financing, and a final investment decision for the second train. The 20-year term, with an option for a 10-year extension, highlights the long-term commitment and potential revenue stream for Cheniere.
Key Highlights
- 1Cheniere's subsidiary, Corpus Christi Liquefaction, LLC (CCLNG), signed a 20-year LNG Sale and Purchase Agreement (SPA) with IBERDROLA, S.A. (IBE).
- 2The SPA commits IBE to purchase approximately 0.76 million tonnes per annum (mtpa) of LNG from the second liquefaction train at the Corpus Christi facility.
- 3Bridging volumes from the first liquefaction train are also included, starting from its commercial operation date until the second train is operational.
- 4The contract sales price is set at $3.50 per MMBtu plus 115% of the monthly Henry Hub natural gas futures price, with partial inflation adjustment.
- 5IBE has the flexibility to suspend LNG deliveries by providing notice, though it remains obligated to pay the fixed portion of the contract price for suspended volumes.
- 6The SPA has a 20-year term, commencing with the first commercial delivery from the second liquefaction train, and includes a 10-year extension option for IBE.
- 7The full development of the second liquefaction train is contingent upon obtaining regulatory approvals, securing financing, and making a positive final investment decision.