Page 12 - NorthAmOil Week 32

NorthAmOil COMMENTARY NorthAmOil

A sixth train and a third
marine berth are being
added at Cheniere’s
Sabine Pass terminal.

Commission (SEC) showed that it collected with the expansion of its LNG infrastructure.
$708mn worth of fees related to these cargoes in The company said in its second-quarter results
the second quarter. that it now planned to place the sixth liquefac-
US cargoes are particularly vulnerable to can- tion train at its Sabine Pass terminal into ser-
cellation because of the nature of most offtake vice sooner than previously expected, in the
contracts for LNG from US terminals, which second half of 2022 rather than the first quarter
typically have greater flexibility built in than of 2023. Construction on Train 6 is now 63.9%
agreements with other LNG producers else- complete.
where in the world. Buyers that cancel cargoes Meanwhile, the third train at Cheniere’s
from US terminals generally only have to pay the Corpus Christi LNG facility in Texas is 90.3%
tolling fee, whereas contracts with exporters in complete and undergoing commissioning, with
Australia or Qatar typically involve take-or-pay start-up anticipated in the first half of 2021.
clauses. Cheniere is also adding a third marine berth
This worked in Cheniere’s favour to help boost and supporting infrastructure at Sabine Pass in
its second-quarter earnings, with the company order to accommodate rising exports from the
reporting a profit of $0.78 per share, while ana- plant, which is located on the Louisiana Gulf
lysts on average had been expecting $0.58 per Coast. Last week, Great Lakes Dredge & Dock
share, according to IBES Refinitiv data cited by announced that it had signed a contract with
Reuters. Bechtel, Cheniere’s engineering, procurement
and construction (EPC) contractor for Train 6
Bouncing back and the third berth expansion at the terminal, for
Now, US LNG exports are being forecast to rise dredging work related to the third berth project. A comparison
again, though some cancellations will continue Dredging work will begin in the third quarter of
and more than 100 cargoes have been cancelled this year. with the first
this year to date, according to the latest media Cheniere did not report any progress on the quarter also
reports. The recovery is being bolstered by the proposed Stage 3 expansion at Corpus Christi
gradual easing of lockdowns globally as many LNG, which would involve the addition of up illustrates how
countries adopt a more localised approach to to seven mid-scale trains at the plant – a dif-
battling coronavirus COVID-19 outbreaks. ferent model from the first three 5mn tonne challenging the
And significantly, China has resumed importing per year (tpy) trains at the terminal. However,
US LNG after a lull as a result of the trade war the company said in its earnings release that it second quarter
between the two countries – though there have continued to work on the Stage 3 expansion, and has been.
been warnings that Chinese demand alone will that proceeding to construction depended on a
not be enough to absorb the growing volumes of number of factors. These include finalising EPC
US LNG. (See GLNG Week 30) and additional commercial agreements, as well
The latest data reported by Reuters on August as obtaining sufficient financing.
6 showed that pipeline gas volumes flowing to Progress on Cheniere’s new capacity comes
LNG plants in August to date had risen to 3.9bn amid concern that oversupply in the global LNG
cubic feet (110mn cubic metres) per day from market will last for some time yet. However, this
a 21-month low of 3.3 bcf (93 mcm) per day in does not appear to have deterred Cheniere from
July. seeking to maintain its dominant position in
It is against this backdrop of improving mar- the US LNG industry and grow its share of the
ket conditions that Cheniere is pushing ahead global market.™

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