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Italy’s Edison signs deal for 1mn t/yr of US LNG

27 Sep 2017, 5.22 pm GMT

Italy's Edison signs deal for 1mn t/yr of US LNG

Houston, 27 September (Argus) — Italian utility Edison has signed a 20-year deal to buy LNG from the Venture Global Calcasieu Pass project being developed along the US Gulf coast, the parties said today.

The deal is for fob supplies of 1mn t/yr, equivalent to about 135mn cf/d (1.4bn m³/yr) of gas, starting when commercial operations begin at the planned Calcasieu Pass terminal in southwestern Louisiana. The expected start-up date is 2021, but it is not clear if that will happen because an investment decision has not been made for the $4.5bn Calcasieu project.

Washington, DC-based Venture Global is developing the 10mn t/yr Calcasieu project and the $8.5bn, 20mn t/yr Plaquemines LNG export project in southeastern Louisiana. Calcasieu would be the first of the two to start operating. Venture Global has not provided a timeline for Plaquemines.

Venture Global and Edison declined to comment as to how much offtake or capacity needs to be sold at Calcasieu to reach an investment decision, or how their contract would be priced. Most US LNG projects are offering a flat take-or-pay liquefaction fee and customers would pay separately for gas and pipeline transportation when they want LNG.

Edison, Italy's only long-term LNG importer, said the Calcasieu Pass deal will contribute to its gas supply portfolio competitiveness and diversification.

Edison is mostly owned by French utility EDF, which has a 20-year deal to buy 380,000 t/yr on a fob basis from Cheniere Energy's Corpus Christi LNG project being built in Texas, when train 2 starts commercial operations. Train 2 is scheduled to come on line in the second half of 2019. The deal would increase to 770,000 t/yr when train 3 starts commercial operations, but Cheniere has not yet financed construction of that unit.

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