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13 years is not long enough: Glencore and Cheniere Sign Long-Term LNG Deal

A liquefied natural gas (LNG) binding sale and purchase agreement (SPA) has been concluded between Cheniere Energy Inc. and Glencore plc.

Earlier last month, Cheniere announced that Glencore had entered into a free-on-board agreement with Cheniere Marketing for approximately 0.8 million tons of LNG per annum, starting in April 2023 for a period of 13 or more years.

LNG is sold per the SPA at a price index based on the Henry Hub price plus a fixed liquefaction fee.

With the signing of this long-term transaction, Cheniere solidifies its position as a global LNG provider, and the company looks forward to a successful long-term relationship with Glencore, one of the world's biggest commodities producers and a leading player in the global LNG market.

This SPA demonstrates the commercial momentum Cheniere has been enjoying and marks another important milestone in contracting LNG capacity, as the company lays the groundwork for a final investment decision on Corpus Christi Stage 3, which Cheniere expects to occur next year.

A total nominal production capacity of approximately 10 mtpa is being planned for Corpus Christi Stage 3 with up to seven midscale liquefaction trains. And all regulatory approvals have been received already.

Adding fuel to the deal, China Petroleum & Chemical Corp., a state-owned company, also signed two contracts last week to purchase LNG from a proposed Louisiana LNG project being developed by U.S. LNG company Venture Global.

Natural gas is now a critical part of a growing global economy, and Cheniere Energy, Inc. is the world's largest producer and exporter of LNG in the United States. The company is a full-service LNG provider, dealing with gas procurement and transportation, liquefaction, vessel chartering, and LNG delivery.

Chenieres’ Sabine Pass and Corpus Christi LNG plants on the Gulf Coast of the United States represent one of the largest LNG liquefaction platforms in the world, with a maximum production capacity expected to be 45 million tons per year. Cheniere is also exploring the potential of expanding its liquefaction operations and other projects within the LNG value chain. The company is located in Houston, Texas, and has offices in London, Singapore, Beijing, Tokyo, and Washington, D.C.

Glencore, for its part, is one of the world's largest globally diversified natural resource companies, which was founded in the 1970s as a trading company. Today, it is a major producer and marketer of commodities, comprising around 150 mining, metallurgical, and oil production assets with 135,000 people employed worldwide.

As always, if you want to find more about researching deals with Rextag data, please, do not hesitate to connect with our Houston office. We will be happy to assist you.

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Pivot to the South: LNG Plants Under Development by Sempra Energy in Louisiana and Mexico

Sempra Energy would develop the 4.0-mmtpa Vista Pacifico LNG export facility located next to the company's Terminal for Refined Products in Topolobampo in a bid to provide gas from the Permian basin in Texas and New Mexico to Asian markets. Once marketing begins, Sempra's management expects Vista Pacifico to be oversubscribed.

Ironwood Midstream expanded its operations in the Eagle Ford region through its merger with Nuevo Midstream. Thanks to this, Ironwood II has increased its crude oil and natural gas throughput capacities in the famous shale to approximately 400,000 bbl/d and 410 MMcf/d, respectively. With 390 miles of pipelines, the company manages 245,000 acres of dedicated land.

Oil output in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. Additionally, gas productivity in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Given that this growth has been expected, recent global market changes make forecasting the output even more challenging. Learning how production will change is easier with early activity tracking, a new service recently launched by Rextag – Pad Activity Monitor. With the help of PAM, you are able to monitor well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days. Additionally, it cuts down activity reporting lag times by at least 98%, from 120-180 days down to just 5-8 days. In order to access reports, charts, tables, and mapping visualizations via Rextag’s Energy DataLink use a web-based application allowing users to filter, download and identify activity on a map or data table. Moreover, customers will be able to set up daily, weekly, and monthly email report notifications.

The EIA forecasts that total output in the main U.S. shale oil basins will increase 142,000 bbl/d to 8.761 million bbl/d in June, the most since March 2020. Oil productivity in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. In the largest shale gas basin, the productivity in Appalachia in Pennsylvania, Ohio and West Virginia will grow up to 35.7 Bcf/d in June, its highest since beating a record 36 Bcf/d in December 2021. Gas output in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Speaking of the Permian future output, putting hands on upcoming changes in production has recently been made easier with the new Rextag's service - Pad Activity Monitor. Thanks to satellite imagery and artificial intelligence, customers are able to monitor the oil and gas wells and are provided with near real-time activity reports related to drilling operations. However, it is noticed that productivity in the largest oil and gas basins has decreased every month since setting records of new oil well production per rig of 1,544 bbl/d in December 2020 in the Permian Basin, and new gas well production per rig of 33.3 MMcf/d in March 2021 in Appalachia.

No sooner had the crude prices soared above $100/bbl than the industry professionals believed in an incredible growth of drilling activity in North America’s largest shale patch. Analysts speculate that additional output of 500,000 barrels of oil daily would become a significant part (4%) of overall U.S. daily production. That is going to flatter oil and gasoline prices. Drilling permits in the Permian Basin are persistently growing, averaging approximately 210 at the beginning of April. Moreover, the permits trend is noticed as an all-time high as a total of 904 horizontal drilling permits were awarded last month. Nowadays, learning and analysing the current situation and predicting the future development become easier with early activity tracking, a new service recently launched by Rextag. Rextag's Pad Activity monitor (PAM) allows you to see well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days with the help of satellite imagery and artificial intelligence. While the increase in drilling will result in higher production, U.S. shale producers will have to overcome several hurdles including labor shortages and supply constraints.

2022 blog posts