Cheniere Arm Inks Deal with Pertamina


Corpus Christi Liquefaction, LLC – affiliate of the publicly traded energy firm Cheniere Energy Inc. (LNG) – has entered into a 20-year Liquefied Natural Gas (“LNG”) Sale and Purchase Agreement (SPA) with Indonesian state-owned energy company PT Pertamina.

Per the deal, Pertamina will purchase LNG of about 0.8 million tons per annum (mtpa) when the Corpus Christi Liquefaction Project comes online. The LNG export facility, near Corpus Christi, Texas, will have a capacity to produce 13.5 mtpa of LNG on completion and includes three 10.1 billion of cubic feet equivalent (Bcfe) storage tanks and two LNG carrier docks. The project’s design will permit up to three LNG trains.

The 20 years of the agreement will be effective from the first commercial delivery, which is expected by 2018. Moreover, the agreement also has the option for a 10-year extension.

This long-term contract with Pertamina is a significant achievement for Cheniere’s Corpus Christi project. By the second half of next year, management plans to start work on its second LNG export terminal.

The agreement is subject to regulatory approvals. Moreover, under another Omnibus Agreement, if the final investment decision (:FID) to construct Train 6 of the Sabine Pass Liquefaction Project precedes the FID for the Corpus Christi project, then this SPA will be nullified upon approval from necessary parties and Pertamina will enter into a SPA with Sabine Pass Liquefaction to receive the same amount of LNG from the Sabine Pass facility.

The market reacted positively to the news and shares of Cheniere Energy went up 6.5% to $44.31 on Dec 5.

Located in Houston, Texas, Cheniere Energy is mainly involved in operations related to liquefied natural gas. In addition to the Sabine Pass liquefied natural gas terminal, Cheniere Energy possesses and operates the Louisiana-based Creole Trail Pipeline.

Cheniere Energy currently carries a Zacks Rank #3 (Hold), indicating that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider other better-ranked players in the oil and gas exploration and production sector like Abraxas Petroleum Corp. (AXAS), Harvest Natural Resources Inc. (HNR) and SM Energy Co. (SM). All these stocks sport a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on SM
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Read the Full Research Report on LNG

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