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Cheniere, KOGAS Kick Off 20-Year LNG Deal

Cheniere Energy Inc. and Korea Gas Corp. (KOGAS) have begun a 20-year sales and purchase agreement (SPA) to supply U.S.-sourced liquefied natural gas (LNG) to the South Korean company from the Sabine Pass Liquefaction facility in Louisiana.

The SPA, which was signed by the companies more than five years ago, officially began on June 1, with the first cargo loading the following day.

Under terms of the deal, Cheniere would sell and make available for delivery to KOGAS about 3.5 million metric tons/year (mmty) of LNG, more than 10% of South Korea's total annual demand. KOGAS operates four LNG terminals with the total storage capacity of 4.84 mmt and supplies LNG to power generation plants, gas-utility companies and city gas companies throughout the South Korea.

South Korea received 27.8 MMcf/d of U.S. LNG last year, seventh most of any country, according to recent NGI analysis of Energy Information Administration data.

Lithuania's state-owned natural gas trader, Lietuvos Duju Tiekimas, has signed a deal with a Cheniere unit to buy LNG and expects to receive its first delivery in the second half of August, according to Reuters. It would be the first time natural gas from the United States was imported to Lithuania, which is heavily reliant on imports from Russia's Gazprom. Neighboring Poland received its first spot cargo from Cheniere Energy's Sabine Pass terminal this month.

U.S. Sen. Bill Cassidy (R-LA) introduced legislation last week that would streamline the permitting process for LNG exports, removing requirements in many instances that the federal government approve LNG exports. It would continue to give the government the ability to limit gas import and export levels during emergencies, disasters and exchanges with particular foreign countries, Cassidy said.

"The previous administration created hurdles that stalled LNG projects that benefit the economy, environment and Louisiana workers," Cassidy said. "This legislation adds certainty to the approval process and brings investment, and better-paying jobs to Louisiana."

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