Cheniere to commit up to 5mtpa to short-term market

24 September 2014 | Roman Kazmin, ICIS Editor, LNG 

US-based energy company Cheniere Energy will market spare volumes produced by its Sabine Pass and Corpus Christi export projects on a spot or short-term basis, Nicolas Zanen, Vice-President of Trading, said during the CWC LNG conference in Singapore on 24 September.

The volumes available will be about 5mtpa, Zanen said, and will be marketed either delivered ex-ship (DES) or free on board (FOB). The company has chartered three LNG carriers to facilitate the trade.

“While it will be easier for us to market the spot volumes on a Henry Hub basis, we will look at the prevailing market conditions at the time of sale and could offer a different mechanism, such as fixed price basis,” Zanen told ICIS.

Cheniere will take control of the 162,000cbm Clean Ocean from Greek shipowner Dynagas in June 2015. Two newbuilds have also been chartered in from Canadian shipowner Teekay LNG with one charter starting in January 2016 and the other in June 2016, Zanen said.

The introduction of extra volumes to the short-term market will boost liquidity and could help a US Gulf LNG spot index to emerge within next four to seven years.

Oil indexation is currently under pressure in Asia, particularly in terms of short-term deals, Zanen said. He estimated that 60% of spot cargoes are sold on a price basis other than oil, such as on a fixed price.

On the long-term markets, Asian buyers are seeking exposure to Henry Hub or hybrid price indexation rather than traditional crude-linked formulae. Recent initiatives seen on the market that could dislodge the dominance of crude-based pricing include development of LNG futures and emergence of regional hubs.

“Henry Hub indexation offers much-needed flexibility to the Asian buyers,” Zanen said.

Cheniere still markets long term

Cheniere continues to market long-term volumes for the Corpus Christi greenfield project in south Texas. So far, 7.65mtpa was sold from Corpus Christi from its planned 13.5mpta, three-train capacity design. The contracts were concluded at 115% of the US Henry Hub futures benchmark plus a $3.50/MMBtu fixed fee on an FOB basis. The remaining volumes will be marketed on the same basis, and Cheniere is open to offers on DES basis as well. 
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