JERA said to be getting Calcasieu Pass' first LNG commissioning cargo in US

Japanese utility JERA was said to be the buyer of the first commissioning cargo at Venture Global LNG's Calcasieu Pass export terminal in Louisiana, multiple market sources told S&P Global Platts.

News of who would be taking the cargo came as the Greek tanker Yiannis remained moored at the terminal on Feb. 9, awaiting loading. The 170,000 cu m Yiannis is controlled by JERA, sources said. US regulators approved Venture Global's request to flow hazardous fluids to its south jetty, while a second request to load the tanker was pending. A pilots dispatcher said previously the ship was tentatively expected to depart Feb. 11.

It was not exactly clear where the cargo was headed after departing Calcasieu Pass, though traders said they believed it would likely stay in the Atlantic Basin, possibly Europe. Separately, Japan, responding to US and EU requests, said Feb. 9 that it would divert some surplus LNG cargoes to Europe in response to low gas inventories across the continent

Spokespersons for JERA and Venture Global did not immediately respond to messages seeking comment.

The current cost for the 12-day voyage to ship LNG from the US Gulf Coast to Northwest Europe on board a tri-fuel diesel electric ship stands at $1.12/MMBtu, versus $2.58/MMBtu for a delivery to East Asia, Platts data showed. Congestion at the Panama Canal, the shortest route for US Gulf Coast cargoes heading to East Asia, was modest on Feb. 9.

JERA was not among the foundational customers that are known to have signed long-term contracts with Venture Global to support the developer commercially sanctioning Calcasieu Pass. The long-term offtakers include Shell, Britain's BP, Italy's Edison, Portugal's Galp, Spain's Repsol and Poland's PGNiG. The trading arm of China's Sinopec has a short-term deal for volumes from Calcasieu Pass.

But JERA, Japan's largest power generation company, has signaled its desire for additional US volumes in recent months. In November 2021, independent infrastructure fund manager Global Infrastructure Partners announced it had agreed to divest its 25.7% stake in Freeport LNG Development to a JERA unit for $2.5 billion. JERA said it expected the deal to provide equity access to 820,000 mt/y of supply capacity from the Freeport LNG project in Texas, which is south of Houston.

Last spring, Venture Global issued a supply tender tied to Calcasieu Pass for at least 12 cargoes from October 2021 to December 2022. The tender was issued at a time when Venture Global was expecting the terminal to start up by late 2021, a year ahead of the original schedule. First LNG production did not occur until Jan. 19, according to a Venture Global regulatory filing on Feb. 3.

According to multiple market sources, Vitol was heard to have won that tender. A second tender for fewer cargoes and starting later was said to have also been issued, an Atlantic-based trader said. Whether JERA may have acquired the cargo to be loaded on the Yiannis via a swap, a spot purchase or some other means was not clear. Vitol declined to comment.

"With the basis value at that time, no wonder they would bring a cargo to Atlantic," said a Europe-based trader. "The value was significantly negative, so no idea how they can justify economics of transportation to JKTC."

It is not unusual for commissioning cargoes to be discounted or for counterparties with whom US terminal operators don't have long-term agreements to buy commissioning cargoes from those terminals. It also is not unusual for cargoes destined for one country to change course while in route, to capture a better netback for the offtaker.

US FOB

Platts assessed the US FOB Gulf Coast Marker at $23.275/MMBtu on Feb. 9, up 17.5 cents/MMBtu day on day. The latest value for Gulf Coast FOB cargoes loading 30-60 days forward was more than four times higher than on the same day a year earlier, not long before Venture Global issued the 12-cargo tender.

At Calcasieu Pass, Venture Global has approval to flow feedgas to four of 18 liquefaction trains for commissioning purposes. As of Feb. 9, it was seeking permission to flow LNG feedgas to two more trains. The facility is designed to have a capacity of 10 million mt/year at full utilization.

Besides Calcasieu Pass, Venture Global has also proposed three additional LNG terminals in Louisiana, including the already permitted Plaquemines LNG project that would have an LNG production capacity of up to 20 million mt/year. Plaquemines is the most advanced of Venture Global's expansion projects, but the developer has yet to announce a formal final investment decision on any of the new facilities.