Cheniere executive indicates that China may buy LNG from the company
“There’s a lot of interest from Chinese buyers for long-term LNG volume, especially for 2020 onwards,” Cheniere Vice President for Asia at Cheniere Marketing Pte Ltd Nicolas Zanen, on the sidelines of the Asia Oil and Gas Conference in Kuala Lumpur, told Reuters.
Cheniere Energy (ticker: LNG) is set to become the first U.S. LNG exporter, with shipments slated to start by the end of this year. However, no Chinese companies have signed up for any U.S. LNG cargoes so far, reports Reuters.
“The Chinese market is a very interesting market for us. I wouldn’t be surprised if in the future we are delivering LNG to China. And not necessarily small buyers, big buyers as well,” he said. Zanen said that some Chinese buyers had already begun moving to secure supplies, although without providing any details.
DOE Warns Freeport LNG Not to Sell LNG to Large Chinese Customers
Freeport LNG, which also has LNG projects under construction, said that it was warned by the Department of Energy not to sign up Chinese customers for LNG from the company’s export terminal in Texas, reports Bloomberg.
“Early on in our project, we were quite frankly warned by the Department of Energy that it would not be looked at as politically correct for us to have a large Chinese customer,” said Freeport CEO Michael Smith. “One of the largest Chinese customers wanted a full [liquefaction] train,” he added.
In return for signing LNG purchase agreements, Chinese buyers demand equity stakes, which they say are required by their lenders, Smith said. Aside from Cheniere’s Sabine Pass terminal, which has an investment from Hong Kong-based RRJ Capital, no U.S. export projects have disclosed Chinese customers.
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According to Cheniere’s 10-K, an aggregate principal amount of $1 billion of convertible unsecured notes due 2021 were issued to RRJ Capital, along with Baytree Investments Pte. Ltd. (based in Mauritius) and Seatown Lionfish Pte. Ltd. (based in Singapore), on a private placement basis. The notes accrue interest at a rate of 4.875% per annum, which is payable in kind semi-annually in arrears by increasing the principal amount of the 2021 notes outstanding.
6 U.S. LNG export facilities get DOE nod to sell LNG to non-free trade foreign buyers
The DOE has given final authorization to six projects, including Freeport’s and Cheniere’s, to export LNG to countries lacking a free trade agreement
Source: Cheniere Energy Corpus Christi LNG Rendering
with the U.S. The terminals would have a combined total capacity 8.61 Billion cubic feet per day, or about 12% of current dry gas production.
“Authorizations are granted to companies that apply, not for the countries themselves,” Lindsey Geisler, a spokeswoman for the Energy Department in Washington, said. “The final destinations for LNG cargoes will be dependent upon commercial arrangements and factors, and are only reported to the Department after delivery.”
The only countries that cannot receive exports are those prohibited by U.S. law or policy, she added. Those countries include Crimea, Iran, North Korea, Sudan and Syria.
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