Cheniere Eying Further LNG Growth Following Corpus Christi Expansion FID

Cheniere Energy Inc. signaled further expansion of its Corpus Christi, Texas, LNG plant could come sooner than expected following the announcement of a final investments decision (FID) related to Stage 3 work at the export facility.

On June 22, Cheniere Energy’s board of directors announced a FID related to the Corpus Christi Stage 3 Liquefaction Project, which will have capacity to ship 10-plus million tonnes per annum (mtpa) from 7 midscale trains. “It’s possible ultimate capacity of the facility could be in the 11-12 mtpa range given 10.7 mtpa of long-term contracts have been signed with CPC, PGNiG, Sinochem, Foran, ENGIE, Apache, EOG and ARX CN,” Tudor Pickering, Holt & Co. (TPH) said June 23 in a research note.

Separately, Cheniere announced two sale and purchase agreements (SPAs) with Chevron Corp.—one from Sabine Pass LNG facility and the other conditional on a positive FID of a new Corpus Christi liquefaction project. In total, 3.2 mtpa is now available for a new project, roughly 60% conditional on a positive FID, according to the TPH analysts. 

“These long-term SPAs underscore the growing demand for reliable, cleaner-burning LNG supply beyond 2040 and further support investment in additional LNG capacity beyond our Corpus Christi Stage III Project,” Anatol Feygin, Cheniere’s executive vice president and chief commercial officer, commented in a June 22 release. “We look forward to leveraging our market-leading LNG platform to explore opportunities to collaborate with Chevron on lower-carbon initiatives in the future.”

Stage 3 Project 

The Corpus Christi Stage 3 project is the second U.S. LNG export plant after the Venture Global LNG Plaquemines facility to reach an FID this year.

The expansion will see Cheniere boost its aggregate nominal production capacity to more than 55 mtpa by the end of 2025 compared to 45 mtpa now, and allow it to supply the global market with additional low-carbon fuels as part of industry-wide decarbonization push away from coal and oil. First exports from the facility could begin in 2025, according to a statement by Cheniere’s president and CEO, Jack Fusco.

Bechtel Energy Inc. has received a full notice to proceed from Cheniere to continue construction related to the project. Bechtel commenced early engineering, procurement and other site work earlier this year under a limited notice to proceed, according to the Cheniere release.

On June 15, Cheniere Corpus Christi Holdings LLC (CCH), a wholly-owned subsidiary of Cheniere, closed an amended and restated $4 billion senior secured term loan due 2029 and an amended, extended and upsized $1.5 billion working capital facility due 2027.

Approximately 50% of the borrowings under the loan will be used to fund the expected cost to develop, construct, and place into service the Stage 3 LNG project, the associated pipeline expansion and other infrastructure at or near the project, and for related business purposes. The remaining costs are expected to be funded by Cheniere, the company said in the statement.

Additionally, Cheniere announced that it contributed its wholly-owned equity interests in Corpus Christi Liquefaction Stage 3 to Cheniere Corpus Christi Holdings, and merged the former into Corpus Christi Liquefaction, a subsidiary of Cheniere Corpus Christi Holdings, with Corpus Christi Liquefaction continuing as the surviving company. 

Chevron SPAs

Cheniere also announced two of its subsidiaries entered into separate long-term LNG SPAs with Chevron U.S.A., a wholly-owned subsidiary of Chevron whereby the oil giant will acquire a combined 2 mtpa at a plateau on a free-on-board basis. The purchase price for the LNG under both SPAs will be indexed to the Henry Hub price, plus a fixed liquefaction fee, Cheniere said June 22 in a separate release. 

Under the first SPA, Chevron will acquire 1 mtpa of LNG from Sabine Pass Liquefaction LLC with deliveries expected to commence in 2026. Deliveries will reach full capacity in 2027 and expire in mid-2042. Under the second SPA, Chevron will acquire 1 mtpa of LNG from Cheniere Marketing LLC with deliveries expected to commence in 2027 and continue for approximately 15 years.

“Our agreements with Cheniere allow us to harness growing U.S. natural gas production and Gulf Coast LNG export capacity to help meet long-term demand for affordable, reliable, and ever cleaner energy,” Colin Parfitt, Chevron midstream vice president, said in the statement.

Cheniere’s deal with Chevron comes just weeks after the company’s subsidiary Cheniere Marketing LLC signed a 15-year SPA with Norway’s Equinor ASA in a deal that would see the European company acquire 1.75 mtpa of LNG commencing in the second half of 2026.

Additionally, Cheniere’s subsidiary, Sabine Pass LNG LP, and Chevron agreed to terms for the early termination of their LNG terminal use agreement in return for a lump-sum payment to be made by Chevron to Sabine Pass LNG during calendar year 2022. Termination of the agreement is subject to the consent of certain lenders to Cheniere Energy Partners, which is expected third-quarter 2022, the company said.