Regional LNG: Woodside to buy LNG from Cheniere Energy

By Romel S. Gurky

ASX-listed Woodside Petroleum Limited, a subsidiary Woodside Energy Trading Singapore Pte Ltd, said Tuesday it has signed a binding LNG Sale and Purchase Agreement with Cheniere Energy Inc, a subsidiary of Corpus Christi Liquefaction LLC.

Woodside said in a statement that under the agreement it will purchase approximately 0.85 million tons of LNG per annum from the Corpus Christi Liquefaction Project on start up of the second train at the LNG export facility being developed near Corpus Christi, Texas. The Corpus Christi Liquefaction Project is planned to include up to three LNG trains with a combined production capacity of 13.5 million tons a year.

LNG will be purchased on a free on board basis. The price payable by Woodside will be 115 percent of the monthly Henry Hub price plus US$3.50 per million British thermal unit (MMBtu), in line with contracts signed with the other buyers from the Corpus Christi LNG Project.

The twenty-year agreement includes an extension option of up to an additional ten years and a mechanism that gives Woodside the option to forgo deliveries with sufficient notice through the payment of US$3.50/MMBtu for cancelled quantities. Cargoes to Woodside from Train 2 are expected to start in 2019.

Woodside CEO Peter Coleman said that the agreement with Corpus Christi Liquefaction, LLC complemented Woodside?s existing portfolio by providing a new product source that diversified Woodside?s LNG product offering.

?This agreement is a demonstration of how we are extending and enhancing our marketing and trading capabilities and adding value to the portfolio,? Coleman said.

?From a geographic, pricing and specification perspective we expect this US LNG to be attractive to LNG purchasers, complement our existing LNG portfolio and allow us to exploit new opportunities.?

The agreement is subject to certain conditions precedent, including Corpus Christi Liquefaction receiving regulatory approvals, securing necessary financing arrangements and making a final investment decision to construct the second train of the Corpus Christi Liquefaction Project.

Key Terms

FOB Price (US$/MMBtu)	115% x Henry Hub + Constant*
Delivery Terms:	Free on Board; Destination Free**
Term:	20 years with an extension option for an additional 10 years
Deliveries Expected From:	Q4 2019
Annual Quantity:	44,120,000 MMBtu (~0.85 MTPA or ~12 cargoes per year)
Cargo Cancellation Cost:	Constant* x Cancelled Quantities
Key Conditions Precedent:	Non-FTA and FERC Approvals; Financing and FID on Train 2 by Corpus Christi Liquefaction, LLC
*The Constant is US$3.50/MMBtu. 11.5% of the Constant subject to escalation at US CPI ** Destination is subject to US export authorisations

Editing by Reiner Simanjuntak