Page 6 - GLNG Week 38 2022

GLNG COMMENTARY GLNG

Cheniere unveils long-term

growth plans

COMMENTARY The US’ leading LNG producer, Cheniere respectively. The company had followed a
Energy, has unveiled its long-term plans for capi- model entailing large-scale liquefaction trains,
tal allocation and capacity growth. The company each with a capacity of 5mn tpy. It is now devi-
cited its strong performance over the past year, ating away from this with Corpus Christi Stage
including achieving an initial $4bn debt reduc- 3, which involves seven mid-scale trains with
tion target, as factors behind higher financial a combined capacity of 10mn tpy that will be
guidance for the current year and more ambi- added by 2025.
tious plans as it looks ahead to the coming years. Subsequently, Cheniere unveiled plans in late
In addition, Cheniere provided some new August to add a further two trains to Stage 3. Ini-
details relating to its long-term plans to raise its tially, it was thought that each of those two trains
liquefaction capacity. The company currently would add a further 1.64mn tpy of capacity at
has 45mn tonnes per year (tpy) of capacity in Corpus Christi. But in its September 12 pres-
operation. The Corpus Christi Stage 3 expansion entation, it shows that Trains 8 and 9 at Stage 3
project, which is now going to add more capacity are expected to account for roughly 5mn tpy of
than previously reported, will ultimately bring capacity. This will take Cheniere’s total liquefac-
this figure to 60mn tpy. Subsequently, under new tion capacity to around 60mn tpy. Beyond that,
plans unveiled on September 12, Cheniere could the company has now started revealing details
increase its total liquefaction capacity to up to of its longer-term growth plans, which could see
90mn tpy. it add up to an additional 30mn tpy of capacity.
Capital allocation What next?
Under the capital allocation plan, which the The company has not disclosed further details
company dubbed its ‘20/20 Vision’, it anticipates at this stage, but its plans are underpinned by
generating more than $20bn of available cash by assumptions that global LNG demand will con-
2026 and achieving over $20 per share of run- tinue to rise steadily until at least 2040 and that
rate distributable cash flow. the US has ample supplies to meet that demand
The company said it had repaid or redeemed for decades to come.
over $4bn of long-term indebtedness, repur- Cheniere has also continued to sign new
chased more than $600mn of shares, initiated offtake agreements with global buyers in recent
and paid $1.32 per common share in dividends months, and each new deal helps bring a further
as of the second quarter of 2022 and reached a stage of its expansion plans closer to reality. In
final investment decision (FID) on the Corpus its second-quarter earnings release the company
Christi Stage 3 expansion project. said it had signed long-term contracts repre-
Given this progress and its “continued out- senting an aggregate of around 140mn tonnes of
performance”, Cheniere said it had now reached LNG up to 2050 since the end of the first quar-
a new cash flow inflection point. It expects its ter. However, this figure also includes supply of
future cash flow, as well as completion of Cor- feedstock gas to Corpus Christi Stage 3, as well
pus Christi Stage 3, to help enable it to further as offtake agreements.
execute on its balance sheet, capital return and Further offtake agreements have also been
growth priorities. announced during the third quarter, with Pet-
The company also said it was raising its 2022 roChina and Thailand’s PTT. Cheniere noted
financial guidance by around $1.2bn – both for in the announcement about its deal with Pet-
earnings and for distributable cash flow. It now roChina that half of the volume it had agreed to
anticipates its consolidated, adjusted earnings supply was conditional on an FID to build addi-
before interest, taxes, depreciation and amorti- tional liquefaction capacity at Corpus Christi
sation (EBITDA) for 2022 to reach $11.0-11.5bn, beyond the first seven trains of Stage 3.
up from previous guidance of $9.8-10.3bn. Its If Cheniere’s global LNG demand expecta-
distributable cash flow for the year is projected tions play out, it can look forward to finding
to come in at $8.1-8.6bn, up from guidance of more buyers, striking more supply deals and
$6.9-7.4bn previously. making its additional expansion plans a reality.
However, it will find itself in competition with
Capacity additions QatarEnergy in particular, as the state-owned
Cheniere’s two liquefaction terminals on the company advances its own plans to dominate
Gulf Coast, Sabine Pass in Louisiana and Cor- global LNG markets through its expansions of
pus Christi in Texas, currently have a capac- the North Field.™
ity of around 30mn tpy and 15mn tpy of LNG

P6 www. NEWSBASE .com Week 38 23•September•2022