Cheniere Energy Inks Long-Term LNG Deal with Korean Power Firm

Cheniere Marketing, a subsidiary of Houston-based energy company Cheniere Energy, has closed a long-term sale and purchase agreement for liquefied natural gas (LNG) with Korea Southern Power (KOSPO), Cheniere Energy said in a press release.

Under the agreement, Korean power generation company KOSPO will purchase around 0.4 million metric tons per annum (mtpa) of LNG from Cheniere Marketing on a delivered ex-ship basis from 2027 to 2046, though smaller annual quantities will be delivered starting 2024. The purchase price for LNG to be delivered before 2027 will be market-based, after which the price will be indexed to the Henry Hub benchmark, plus a fee, Cheniere said.

The volumes under the agreement “are subject to a positive final investment decision with respect to the first train of the Sabine Pass Liquefaction Expansion Project” of Cheniere Energy Partners LP (Cheniere Partners).

Cheniere Partners owns the Sabine Pass LNG terminal located in Cameron Parish, Louisiana. The terminal has natural gas liquefaction facilities consisting of six liquefaction trains, with a total production capacity of approximately 30 mtpa of LNG, according to the company’s website. The Sabine Pass Liquefaction Expansion Project is being developed to include up to three natural gas liquefaction trains with an expected total production capacity of approximately 20 mtpa of LNG.

Higher Q1 Profit

Earlier this month, Cheniere Partners reported $1.9 billion in net income for the three months ended March 31, an increase of around $1.8 billion year over year. The company said that the increase was primarily due to non-cash favorable changes in fair value of commodity derivatives and increased volumes of LNG delivered.

Adjusted EBITDA decreased year over year by approximately $5 million in the quarter, it said in a press release. The decrease was due to lower regasification revenues related to the early termination of the terminal use agreement between Sabine Pass LNG, L.P. and Chevron Corp., the company said.

Cheniere Partners declared a cash distribution of $1.03 per common unit to unitholders of record as of May 8, comprising a $0.775 base amount and a $0.255 variable amount. The distribution takes into consideration annual debt repayment, capital allocation goals, anticipated capital expenditures to be funded with cash, and cash reserves, among other factors.

According to the press release, Cheniere Energy is “pursuing liquefaction expansion opportunities and other projects along the LNG value chain”. The company’s Sabine Pass and Corpus Christi liquefaction facilities on the USA Gulf Coast have a total production capacity of approximately 45 mtpa of LNG in operation and an additional 10+ mtpa of expected production capacity under construction.

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