Texas-based Cheniere Energy Inc. has signed a 20-year contract with Indonesia’s state-owned Pertamina, which will purchase 0.8 million tons annually of LNG for the duration of the 2-decade agreement.
The agreement signed last week between Corpus Christi Liquefaction LLC, a Cheniere subsidiary, and Pertamina will enter into force as soon as operations begin at the LNG facility, with the first deliveries anticipated in 2018.
The Corpus Christi plant has a design and permit capacity of three trains and 13.5 mtpa of LNG. Pertamina will purchase LNG on an FOB basis with prices indexed to the monthly Henry Hub price plus a fixed component.
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"Pertamina ... is the first foundation customer for our Corpus Christi Liquefaction Project being developed in Texas," Cheniere's chairman and CEO Charif Souki said in a statement. "Indonesia has historically been one of the largest exporters of LNG and is now in the process of converting one of their export terminals into an LNG receiving terminal."
This is Pertamina’s first LNG deal for Indonesia, which will use the gas for storage and regasification plants that are lacking in supplies.
"It [is] a milestone for Indonesia, particularly Pertamina, as it is the first time LNG [is] purchased from an international supplier to meet Indonesia's energy demand. It will create a multiplier effect to support economic growth," Pertamina said in a statement.
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Cheniere also owns the Sabine Pass LNG port in coastal Louisiana. The facility can hold 17 billion cubic feet of natural gas, which is equivalent to 25% of daily US consumption. Construction on the facility began in August 2012 and is now ahead of schedule, with the first unit slated to be operational by late 2015.
According to NASDAQ, if the final investment decision (FID) to construct Train 6 at the Sabine Pass facility comes before the FID for Corpus Christi, the deal with Pertamina will be cancelled and a new deal will be made for deliveries from Sabine Pass instead.
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Cheniere has seen its stocks rise over the past two months. On 5 December, on the announcement of the deal with Pertamina, Cheniere stocks rose 6.5% to $44.31.
By. Charles Kennedy of Oilprice.com
