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Cheniere Overcomes Harvey Setbacks in 'Tremendous' 3Q2017

Houston-based Cheniere Energy Inc. saw its revenues nearly triple and the liquefied natural gas (LNG) export business boom in 3Q2017, with progress made at both the Sabine Pass and Corpus Christi facilities, despite the impacts of Hurricane Harvey, CEO Jack Fusco said Tuesday.

It was "a tremendous quarter," Fusco said, despite Harvey, which "was in many ways an unprecedented weather event in this region. And particularly for Cheniere, as it separately impacted Corpus Christi, our Houston headquarters and the Sabine Pass area, each in historic fashion. Our facilities and our people displayed tremendous resilience and resolve, and we came through the storm as a company with only a few scratches."

Harvey, which slammed into South Texas as a Category 4 hurricane in late August, temporarily shut down about 25% of gas and oil production in the Gulf of Mexico and as much as 20% of U.S. refining capacity.

"At Sabine Pass, LNG production continued uninterrupted throughout the storm," Fusco said. "At both Sabine Pass and Corpus Christi we resumed construction quickly and orderly with no material impact to our schedule."

During the quarter, Cheniere exported a total of 44 LNG cargoes from Sabine Pass LNG -- the only operating export facility in the Lower 48 -- five of them classified as commissioning cargoes from Train 4, which was substantially completed during the quarter, five months ahead of schedule, Fusco said.

A total of 200 LNG cargoes have been exported from Sabine Pass to 25 of the world's 40 LNG importing countries. Cheniere also is building an export terminal in Corpus Christi, TX.

A total of 144 TBtu of LNG was loaded during 3Q2017, 18 TBtu of it commissioning cargoes, Cheniere said.

More than 50 of those cargoes have been delivered to Asia, which is an important region for Cheniere's growth, Fusco said. "We expect these markets to continue to be active for spot cargoes. We have executed a short-term contract to deliver cargoes to China this winter. We just received our approval to open an office in Beijing to supplement our regional presence from our Singapore office. This should facilitate more direct communications with potential offtakers in China."

Last week, Cheniere secured a memorandum of understanding (MOU) to export gas to Chinese markets. The MOU to export gas for China National Petroleum Corp. (CNPC) was reportedly worth as much as $11 billion. Cheniere continues to be tight-lipped about details of the MOU.

"We have made considerable progress in China," Fusco said Monday. "This MOU is an important step as we continue to build our relationships in this high-growth market and progress on negotiations on long-term contracts....

“As you all know, the LNG market has become increasingly competitive. As such, I will not discuss the MOU or any of our contracts in detail."

Total natural gas demand in Asia is up about 15% compared with 2016, and LNG imports to the region were 60% higher in 3Q2017 than in 3Q2016, according to Cheniere’s Anatol Feygin, chief commercial officer.

"South Korea's LNG imports have continued to outpace expectations, up more than 30% in the third quarter, with Sabine Pass volumes increasingly contributing to the country's gas needs. Iberia and southern Europe, especially the three markets of Spain, Portugal and Italy, were unseasonably hot this summer and consumed record amounts of gas...All three countries received cargoes from our Sabine Pass facility."

Cheniere reported revenues of $1.4 billion for the third quarter, up from $465 million in the year-ago quarter.

The company reported a net loss of $289 million (minus $1.24/share) versus a net loss of $101 million (minus 44 cents) in the year-ago period.

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