ARC Resources in second supply deal with Cheniere Energy
Canadian Montney producer ARC Resources said November 29 it had struck a second long-term supply agreement with Cheniere Energy to supply Cheniere’s Sabine Pass Stage 5 Expansion Project with 140,00 mnBtu/day of natural gas for a period of 15 years.
The supply deal will begin with the start of commercial operations of the first train (Train 7) at Stage 5, expected in 2029. The Stage 5 expansion contemplates the addition of 20mn tonnes/year of new capacity from three trains and is currently moving through the US federal regulatory process.
“With today’s announcement, we are advancing the export of low-cost, low-emission Canadian natural gas to consuming markets in Europe,” ARC CEO Terry Anderson said. “This marks ARC’s second long-term LNG agreement linked to foreign indices and is an important milestone in the execution of our market diversification strategy.”
ARC entered its first 15-year supply arrangement with Cheniere in 2022, also for 140,000 mnBtu/day, for delivery to Train 7 of the Corpus Christi Stage III expansion, expected to reach commercial operations in 2027. It also has reached a non-binding memorandum of understanding to supply and liquefy 200mn ft3/day of natural gas at the 3mn tonnes/year Cedar LNG project on Canada’s west coast.
For the Sabine Pass volumes, ARC will receive an LNG price based on the Dutch Title Transfer Facility (TTF) price, after fixed deductions for liquefaction, shipping and regasification fees. The earlier Corpus Christi deal is priced based on Platts JKM™ after deducting for fixed LNG shipping costs and a fixed liquefaction fee.
“This is the second long-term (supply) agreement between Cheniere and ARC Resources, and further progresses the commercialisation of the SPL Expansion Project,” Cheniere CEO Jack Fusco said. “This agreement will enable Cheniere to deliver increased quantities of Canadian natural gas to Europe, where energy security has never been more important.”
The supply agreement, Cheniere said, remains subject to a positive final investment decision (FID) for the Sabine Pass Expansion Project, which entered the Federal Energy Regulatory Commission’s pre-filing review process earlier this year.
Alongside the supply agreement with ARC Resources, Cheniere also said it had entered into a long-term LNG sale and purchase agreement (SPA) with Austrian energy trader OMV Gas Marketing and Trading for up to 12 cargoes, or 850,000 tonnes/year, of LNG at a TTF-linked price beginning in 2029. The LNG will be sold to OMV on a delivered ex-ship (DES) basis at the Gate LNG Terminal in the Netherlands, where OMV holds regasification capacity.