Cheniere Energy Inc. announced Thursday that it has entered into negotiations with two European companies -- Spain's Endesa SA and Italy's Enel Trade SpA -- to contract up to 1.5 million tons per annum (mt/year) of bi-directional liquefied natural gas (LNG) processing capacity at the Sabine Pass LNG terminal in Louisiana.
"We are pleased to announce the start of negotiations of definitive agreements with Endesa and Enel Trade," Cheniere Chairman and CEO Charif Souki said Thursday. "To date we have entered into memorandums of understanding [MOU] for up to 9.8 million mt/year of processing capacity, which exceeds our targeted capacity of 7 million mt/year for the first two trains."
Those trains are part of the Houston-based company's liquefaction project. Cheniere proposes building up to four modular LNG trains, each with a peak processing capacity of up to approximately 0.7 Bcf/d of gas and an average liquefaction processing capacity of approximately 3.5 million metric tons per year. The first two trains are expected to have the capacity to process on average approximately 1.2 Bcf/d of pipeline-quality gas.
Cheniere's Sabine Pass LNG terminal is located on the Sabine Pass Channel in western Cameron Parish, LA. It has a sendout capacity of 4 Bcf/d and a storage capacity of 16.9 Bcfe.
The negotiations with Endesa and Enel are the latest in a string of LNG deals for Cheniere since September 2010, when the company was granted permission from the U.S. Department of Energy's (DOE) Office of Fossil Energy to export LNG produced in the Lower 48.
On Nov. 8, Cheniere signed MOUs with Morgan Stanley Capital Group Inc. for the import capacity and about 20% of a proposed 7 million mt/year of natural gas liquefaction capacity at the terminal. Under the deal, Morgan Stanley would have the ability to export or import 1.7 million mt/year of LNG from the proposed facility (see Daily GPI, Nov. 9, 2010).
Then on Nov. 11, the company entered talks with ENN Energy Trading Co. Ltd. -- a subsidiary of one of the largest independently owned natural gas operators in China -- to contract 1.5 million mt/year over a 20-year term for LNG capacity at the terminal. (see Daily GPI, Nov. 12, 2010).
Cheniere then began negotiations with Gas Natural Fenosa, another Spanish firm, on Nov. 29. Fenosa proposed contracting up to 1.5 million mt/year per year of LNG capacity (see Daily GPI, Nov. 30, 2010).
Additional negotiations took place with France's EDF Trading on Jan. 20 (see Daily GPI, Jan. 21) and with Japan's Sumitomo Corp. on Jan. 27 (see Daily GPI, Jan. 28). EDF proposed contracting between 0.7 and 1.5 million mt/year of bi-directional LNG processing capacity, while Sumitomo sought up to 1.5 million mt/year.
"Our MOU process has demonstrated that there is significant interest in our project," Souki said. "We now look forward to converting these non-binding MOUs into definitive agreements and finalizing reserved capacity for customers."
The company said it plans to begin exporting LNG as early as 2015.
When the DOE approved Cheniere's request to export LNG in September 2010, it authorized the export of about 803 Bcf annually on 30-year terms to any nation with a free trade agreement with the U.S. (see Daily GPI, Sept. 13, 2010). The decision made the Sabine Pass LNG terminal a bi-directional facility, and the first to be authorized to export natural gas produced in the U.S.
Endesa, an Enel Group company, is the largest electric utility and the top ranked private electricity multinational in Latin America. Meanwhile Enel Trade is a subsidiary of Enel, Italy's largest power company and Europe's second listed utility by installed capacity.
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