Shell takes first Sabine Pass cargo under long-term deal
Hague-based LNG giant Shell confirmed it has started taking cargoes from Cheniere’s Sabine Pass LNG export terminal in Louisiana, the first of its kind to ship U.S. shale gas overseas.
Shell has a 20-year offtake agreement with Cheniere for 3.5 mtpa of liquefied natural gas from Train 1 at Sabine Pass.
“We can confirm Shell’s first LNG cargo from Sabine Pass, as part of a long-term agreement with Cheniere, loaded on 16 May 2016. Shell is a global leader in LNG shipping and trading, and we are proud to be at the forefront of unlocking US LNG exports,” a Shell spokesperson told LNG World News in an emailed statement.
As previously reported by LNG World News, the cargo is being carried onboard the 155,000 cbm GasLog Shanghai LNG tanker.
The liquefied natural gas tanker is chartered by BG’s Methane Services, now part of Shell. The Anglo-Dutch multinational company completed the $54 billion acquisition of UK-based LNG player BG in February. The deal created the world’s largest LNG company.
The spokesperson did not comment on the final destination of the Sabine Pass cargo.
The LNG tanker is currently located in the Caribbean Sea, according to AIS data provided by the vessel tracking website, MarineTraffic.
Cheniere’s Sabine Pass terminal in Louisiana has exported nine cargoes of the chilled fuel, or about 31.9 Bcf, since start-up in February. Eight of them were commissioning cargoes, with this one being the first commercial cargo from the facility.
According to the contract signed in 2011, Shell will pay Cheniere a fixed sales charge of $2.25 per MMBtu for the full contract quantity regardless of whether the company purchases any cargoes of LNG.
Shell will also pay a contract sales price for each MMBtu of LNG delivered under the deal. The contract sales price will be equal to 115% of the final settlement price for the Nymex Henry Hub natural gas futures contract for the month in which the relevant cargo is scheduled.
Cheniere is developing up to six trains, each with a production capacity of approximately 4.5 mtpa of LNG, at the Sabine Pass terminal adjacent to the existing regasification facilities.
According to Meg Gentle, president of Cheniere Marketing, the United States are set to become the third largest liquefied natural gas supplier by 2020.
Gentle said recently at a conference in Amsterdam that the facilities currently under construction in the U.S. will bring around 60 mtpa of LNG volumes by 2020, taking up about 20 percent of the market by that time.
LNG World News Staff