Cheniere Energy has signed a 15-year sales and purchase agreement with major oil trader Vitol to sell around 0.7 million tons of liquefied natural gas (LNG) annually beginning this year, the U.S. company said on Monday, announcing its second major long-term LNG deal with one of the biggest oil and commodity trading houses.
Under the deal, Vitol will buy LNG from Cheniere Energy’s subsidiary Cheniere Marketing on a free on board (FOB) basis, with the purchase price for LNG indexed to the monthly Henry Hub price, plus a fee.
“This agreement continues Cheniere’s commercial momentum and supports our growth plans, while demonstrating the value LNG buyers place on Cheniere’s unique ability to offer flexible solutions tailored to the needs of LNG customers worldwide,” said Jack Fusco, Cheniere’s President and CEO.
“We believe that LNG has an important role to play in the future energy mix and that its evolution will require a more flexible and tradeable LNG market,” said Russell Hardy, Group CEO at Vitol.
Houston-based Cheniere Energy owns and operates the Sabine Pass LNG terminal in Louisiana and is developing and building liquefaction projects near Corpus Christi, Texas.
“Cheniere is also exploring a limited number of opportunities directly related to its existing LNG business,” the company said today.
At the beginning of this year, Cheniere and another major commodity trader, Trafigura, struck an LNG sale and purchase agreement, under which Trafigura would buy around 1 million tons a year of LNG from Cheniere on a free on board basis for 15 years beginning in 2019. The purchase price for LNG will be indexed to the monthly Henry Hub price, plus a fee.
In 2017, Vitol delivered 7.4 million tons of LNG worldwide.
In recent years, Trafigura, Vitol, Gunvor, and Glencore have grown their LNG trading businesses. Last year, these four firms traded approximately 27 Mt of LNG, or 9 percent of total LNG sold worldwide, energy consultancy Wood Mackenzie has estimated.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.