Cheniere to sell LNG to Engie as more US gas heads for France

By ANNA SHIRYAEVSKAYA
Bloomberg

Engie agreed to buy liquefied natural gas (LNG) from Cheniere Energy, increasing the importance of France as a market for US fuel.

The Houston-based company will ship as many as 12 LNG cargoes a year to France’s Montoir-de-Bretagne regasification terminal under a five-year contract, Engie said Wednesday in a statement. The deliveries, on an ex-ship basis, will start in 2018 at prices linked to northern European markets, Engie said.

The LNG can alternatively be shipped to other European terminals.

US LNG will help diversify the origin of gas consumed in Europe, according to Engie. A third of European gas demand is met by Russian gas delivered by pipeline from Siberian fields. Norway, domestic production and LNG from existing suppliers such as Qatar and Algeria account for the rest.

“Importing US LNG will participate to strengthen the security of supply of Europe,” Pierre Chareyre, Engie executive vice president in charge of global gas and LNG, said in the statement.

Cheniere’s Texan Corpus Christi liquefaction plant currently under construction will be the primary source for supply under the contract, Engie said. Corpus Christi is due to start its first production plant, or train, in 2018. Cheniere plans to ship the first US Gulf Coast cargo from Sabine Pass in Louisiana in January, marking the start of a wave of export projects resulting from the US shale-gas boom.

EDF Contracts

Cheniere also has agreements with Electricite de France for as many as 50 cargoes a year from Sabine Pass for delivery through 2018, making France a key European entry point for exports of US fuel.

In August, Cheniere signed a deal to sell as many as 26 LNG cargoes through 2018 from Sabine Pass to EDF’s Dunkirk LNG site, which plans to start operations by the end of this year. A month later, EDF signed a second deal, for 24 cargoes to be delivered in 2017-2018. In 2014, EDF signed a 20-year deal to buy LNG from Corpus Christi.

Both EDF and Engie are French utilities that are also active in global LNG trading.

Cheniere expects to have about 9 MMtpy of LNG available for its own portfolio from the nine liquefaction trains being developed at Sabine Pass and Corpus Christi, it said in a separate statement Wednesday. The two EDF contracts for supplies through 2018 were linked to prices on the Dutch Title Transfer Facility.

“This SPA with Engie furthers our strategy of supplying LNG to European markets and diversifies our marketing portfolio with sales tied to northern European price indices,” Cheniere CEO Charif Souki said in the statement Wednesday.

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