Indonesia doubles Corpus Christi LNG purchases Indonesian state-owned oil and gas firm has signed a contract to double its long-term LNG purchases from Cheniere Energy's planned Corpus Christi terminal in Texas to as much as 1.52mn t/yr, equivalent to 213mn cf/d (6mn cu m/d) of gas.
Under the agreement, Pertamina can buy up to 0.76mn t/yr for 20 years, beginning when the planned second liquefaction train at Corpus Christi starts commercial operations, which is expected to occur in 2019. Pertamina has the right to extend the contract by 10 years, Cheniere said today.
Pertamina does not have to buy LNG if it does not want it, but it will have pay $3.50/mmBtu for all its capacity, or $139mn/year, whether it buys LNG or not. If it wants LNG, it will pay an additional charge to Cheniere for all the volume it takes. That charge will be 115pc of the Nymex Henry Hub monthly settlement price for the month in which a cargo is scheduled.
The terms are the same as Pertamina's first deal for up to 0.76mn t/yr of supply from Corpus Christi that was signed in December. Pertamina will pay Cheniere a combined capacity cost of $278mn/year, plus additional charges for LNG. That 20-year contract begins when the first train starts commercial operations, as early as 2018.
The deals are contingent on Houston-based Cheniere getting all necessary regulatory approvals and making a positive final investment decision. Cheniere has now signed six 20-year supply contracts for Corpus Christi totaling 6.9mn t/yr, completing its long-term contracting for the planned first two trains at the project. Cheniere wants to build up to three equal-sized trains at Corpus Christi with a combined baseload capacity of 13.5mn t/yr and peak capacity of 15mn t/yr.
At full build-out, the terminal and associated pipeline have mated cost of $10.5bn-$11bn, excluding financing costs but including an estimate for Cheniere's costs and contingencies.
"We expect to complete all remaining necessary steps to reach a final investment decision and begin construction by early 2015," Cheniere chief executive Charif Souki said.
Indonesia is a major LNG exporter, but wants to also import some supplies to meet rising domestic gas demand in areas of the archipelago country that are not connected to the pipeline gas grid. Marketing its US supply to customers worldwide could make economic sense if US domestic gas prices continue to be much lower than Asian LNG prices linked to oil prices.
Earlier this month, the US Federal Energy Regulatory Commission (FERC) said in a draft environmental assessment that the Corpus Christi project would not seriously harm the environment if specified mitigating conditions are met. FERC plans to issue a final environmental impact statement on 8 October, and a positive final statement would be a key step for the project to secure FERC construction approval.
The US Department of Energy (DOE) has authorized the Corpus Christi project to export up 2.1 Bcf/d to countries that have free trade agreements (FTAs). Cheniere has applied to export the same volume to non-FTA nations. The project at present is second in line for DOE review of its non-FTA application. But the DOE could rule on the non-FTA application after Corpus Christi gets environmental approval from FERC, if it moves ahead with a proposal released last month to streamline the non-FTA approval process.
In December, Cheniere awarded engineering and construction firm Bechtel a $9.5bn contract to build the Corpus Christi terminal. San Francisco-based Bechtel is now building Cheniere's Sabine Pass LNG export terminal in Louisiana, which is expected to start commercial operations in early 2016.
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