PetroChina agrees to buy up to 1.8 million mt/year of LNG from Cheniere

PetroChina agreed to buy up to 1.8 million mt/year of additional supply from Cheniere Energy under a long-term FOB deal, the US exporter said July 20.

The deal between a PetroChina affiliate and Cheniere's marketing unit builds on two previous contracts under which PetroChina agreed to buy a combined 1.2 million mt/year of LNG from Cheniere. A portion of the supplies under the previous contracts is in effect, with shipments on the balance starting in 2023.

The purchase price for LNG under the latest deal -- which will begin in 2026, reach its full capacity in 2028 and continue through 2050 -- is indexed to the US Henry Hub price, plus a fixed liquefaction fee. Half of the total volume, or around 900,000 mt/year, is subject to Cheniere making a positive final investment decision to build additional liquefaction capacity at its Texas export facility beyond the seven-train mid-scale expansion that is currently under construction. Cheniere also operates a liquefaction terminal in Louisiana.

Persistently high spot LNG prices since the fall of 2021 -- a turnabout from record lows in 2020 -- has spurred renewed interest in US LNG supplies. Offering relatively low fixed liquefaction fees and destination flexibility for cargoes, US LNG exporters and project developers including Cheniere, Venture Global LNG, NextDecade and Energy Transfer have announced new long-term deals with Asian and European buyers in recent months.