20-year gas offtake deal lands on Commonwealth LNG’s booking sheet

Kimmeridge Texas Gas (KTG), an affiliate of the energy-focused alternative investment manager Kimmeridge, has won a new multi-year liquefied natural gas (LNG) sale and purchase agreement (SPA) for its LNG export terminal currently under development on the west bank of the Calcasieu Ship Channel at the mouth of the Gulf of Mexico/America near Cameron Parish, Louisiana.

The deal will enable an undisclosed buyer, described as a major Asian energy company, to buy 1 million tons per annum (mtpa) of LNG for 20 years from Commonwealth LNG‘s 9.5 mtpa facility currently under development in Cameron, Louisiana. This SPA comes on the heels of Mubadala Energy’s decision to make an equity investment in the upstream gas and LNG business run by Kimmeridge’s subsidiary.

Ben Dell, Managing Partner of Kimmeridge and Chairman of Commonwealth, commented: “This offtake agreement marks another important milestone for Commonwealth as we work toward a final investment later this year and first offtake planned for 2029. We look forward to working with this buyer, a longstanding leader in LNG, as we further our integrated wellhead-to-water strategy in delivering LNG to critical markets around the world.”

Kimmeridge got the Trump administration’s blessing to move forward with this proposed LNG export terminal earlier this year. Commonwealth’s Phase 1 development is expected to bring an investment of more than $11 billion to Louisiana and generate an estimated $3.5 billion in annual export revenue.

Furthermore, the project is expected to employ approximately 2,000 workers at the peak of construction and provide approximately 275 high-paying jobs when the facility begins operations in late 2029. Commonwealth is owned by Kimmeridge SoTex Holdco (SoTex), which was founded by Kimmeridge.

Through SoTex, which also holds an upstream natural gas development company called Kimmeridge Texas Gas, Kimmeridge is building what is considered to be America’s first integrated gas independent to deliver low-cost natural gas from wellhead to water and meet burgeoning demand for responsibly produced LNG across global markets.

Farhad Ahrabi, Commonwealth President and CEO, highlighted: “We look forward to building and strengthening our partnership with this buyer in mutually beneficial ways as we progress on our journey. We’re committed to building and creating a safe, reliable, efficient, and well-governed LNG operating company.”

Moreover, the SPA will become fully effective upon the satisfaction of customary conditions, including an affirmative final investment decision (FID) for the project. Commonwealth LNG’s leadership team is described as being committed to building a world-class LNG facility by staying relentlessly focused on managing risk and lowering costs.