US major Chevron takes 4mtpa of LNG offtake through Venture Global, Cheniere deals

Ruth Liao

22-Jun-2022

HOUSTON (ICIS)–US major Chevron announced two major US LNG offtake agreements for a total of 4mtpa with producers Cheniere and Venture Global on 22 June.

The two agreements, announced within an hour of each other, mark out Chevron’s intent to monetise its massive Permian basin in west Texas and southeastern New Mexico.

Sources have said Chevron could potentially eye as much as 10mtpa in liquefaction capacity, although this figure was not immediately confirmed.

Chevron initially passed on the first wave of US LNG projects a decade ago and opted instead to focus on its Australian production, developing Gorgon and Wheatstone.

Chevron’s two sales and purchase agreements (SPAs) with Cheniere’s Sabine Pass Liquefaction subsidiary cover 1mtpa between 2026 to 2042.

Under the first SPA, volumes would start in 2026 and then step up to a full 1mtpa during 2027 and continue through mid-2043.

Another 1mtpa is to be delivered for around 15 years from 2027, which hinges on Cheniere making a final investment decision (FID) on expansion volumes beyond Cheniere’s Corpus Christi Stage 3 on an FOB basis. Cheniere also announced its expected FID on Stage 3 on 22 June.

Sources said the Chevron-Cheniere fixed liquefaction fee above the Henry Hub indexation was likely concluded around $2.10/MMBtu, which would be comparable to the Equinor deal announced on 9 June, although this was not publicly available.

VENTURE GLOBAL OFFTAKE

Chevron’s deal with Venture Global was announced as two 20-year SPAs for a total offtake of 2mtpa, with 1mtpa to come from Plaquemines LNG and another 1mtpa to be sourced from Venture Global’s third LNG project, CP2 LNG.

Plaquemines LNG is currently under construction after Venture Global made FID on the first phase in May. The company expects construction of the CP2 project to begin in 2023.

Chevron has been in close discussions in recent months for US LNG.

The US fixed liquefaction fee for Chevron with Venture Global was likely priced in the low $2.00s/MMBtu range, sources said, although this was not immediately confirmed.

NEXT DEALS

Besides Chevron, US major ConocoPhillips is expected to soon announce with a US LNG project.

ConocoPhillips’ upstream position in the US also aligns with Lower 48 exports at a time when the major currently has no US LNG export positions.

ConocoPhillips operated the Kenai LNG plant in Alaska for decades before shuttering the plant in 2017 and then selling it to Andeavor. Similar to Chevron, ConocoPhillips previously has held its position in LNG in the Pacific Basin, with its 47.5% stake in Australia Pacific LNG (APLNG).

Other majors may also double down on its US Gulf offtake. US ExxonMobil may agree to another 2mtpa with developer NextDecade, sources said, after ExxonMobil’s initial 2mtpa announced with Venture Global in May.

Japanese buyer Inpex also has been close in discussions with US LNG sellers, sources said. Inpex may be considering as much as 0.8mtpa of longterm LNG, which could be announced in the coming months.

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