Cheniere strikes 15-year LNG offtake deal with Equinor tied to Sabine Pass expansion

Norway's Equinor will buy up to about 1.75 million mt/year of LNG from Cheniere in a long-term free-on-board deal supporting the US exporter's recently proposed expansion of its Sabine Pass LNG terminal in Louisiana, the companies announced June 21.

The volumes under the sale and purchase agreement will be sold by Cheniere's marketing unit for a purchase price linked to Henry Hub, plus a fixed liquefaction fee. Deliveries of half the volumes will start in 2027, while deliveries of the remaining half would begin at the end of the decade, subject to conditions that include Cheniere reaching a final investment decision on the expansion of its flagship LNG export facility. The term of the SPA is 15 years from the start of delivery of the full 1.75 million mt/year of LNG volumes.

The deal, which doubles the total contracted volumes Equinor has contracted across Cheniere export facilities to around 3.5 million mt/year, marked the latest in a wave of contracting activity over the past year for US supplies, which offer fixed fees and destination flexibility.

"The LNG market is expected to grow significantly because of the role it will play in providing energy security as well as enabling a transition to a cleaner energy mix in many markets," Equinor said in a statement. "With more US LNG in its portfolio, Equinor will increase its role as a supplier of natural gas in global markets while maintaining its position as the major supplier of natural gas to Europe."

Sabine Pass expansion

Cheniere's proposed expansion of Sabine Pass entails three 6.5 million mt/year liquefaction trains. The total 20 million mt/year expansion also includes two storage tanks and associated facilities including a boil-off gas re-liquefaction unit with a production capacity of about 750,000 mt/year. Cheniere announced its first long-term deal tied to the Sabine Pass expansion in May, an SPA for 400,000 mt/year of LNG with Korea Southern Power Co., spanning more than 20 years.

Cheniere CEO Jack Fusco in a statement announcing the Equinor deal described the project as one "we continue to rigorously develop in order to meet the world's growing demand for secure, long-term energy supplies and the economic and environmental benefits of Cheniere's LNG."

Cheniere laid out plans for its Sabine Pass expansion in February in a filing at the US Federal Energy Regulatory Commission requesting to enter the agency's prefiling review process ahead of a formal application that the company said it expects to submit by the end of the year.

Cheniere has said it expects to start construction on the expansion in late 2025, with a "longstop date" for full in-service in the second half of 2032, although the project could be built in stages and individual trains may enter service sooner.

Equinor deals

Cheniere is already building a 10 million mt/year midscale expansion at its Corpus Christi LNG export terminal in Texas, which the company said could be followed by a further expansion of the plant. Cheniere told FERC in late March that it already has the commercial support it needs to build two additional midscale liquefaction trains that would add about 3.28 million mt/year of production capacity.

Equinor has also agreed to a deal supporting the Corpus Christi expansion, having agreed to a similar long-term FOB deal to buy 1.75 million mt/year from Cheniere shortly before the US exporter announced an FID on the seven-train midscale expansion project in June 2022. Deliveries of half of the volumes under that sale and purchase agreement were set to begin in the second half of 2026, with the remaining volumes subject to Cheniere commercially sanctioning additional capacity at the Corpus Christi facility beyond the seven-train expansion.

"Equinor has an ambition to strengthen its role as a leading supplier of natural gas, and with our supply agreements with Cheniere, we are expanding our global position," Helge Haugane, Equinor's senior vice president for gas and power, said in the company's statement.