Cheniere to Sell LNG to Glencore Under 13-Year Contract

(Bloomberg) -- Cheniere Energy Inc., the largest U.S. producer of liquefied natural gas, agreed to sell about 800,000 metric tons per year of the fuel to Glencore Plc in the industry’s latest multi-year contract with a commodity trading house.

The so-called sale and purchase agreement will last 13 years starting in April 2023, Cheniere said Monday in a statement. The price Glencore will pay for the LNG will be indexed against the Henry Hub benchmark U.S. natural gas price.

Glencore, Gunvor Group Ltd. and Vitol Group are among trading companies snapping up long-term accords with U.S. exporters to give them flexibility on supplies in the years ahead. The advantages of having contracted production to call on has been highlighted by the current squeeze in the international market. Buyers have helped send spot prices to a record in recent weeks as they scramble to secure cargoes amid shortages in Asia and Europe.

Booming demand overseas is also a welcome opportunity for Cheniere and other U.S. exporters to lock in funding for new capacity. The Glencore contract adds momentum to Cheniere’s planned Stage 3 expansion of its Corpus Christi export plant in Texas. The company said it expects to make a final investment decision next year on the project, which is fully permitted and would boost Corpus Christi total liquefaction production capacity by 10 millions tons to a total 25 million tons per year.  

Clear here to see BloombergNEF’s latest LNG winter outlook report

Rival U.S. developer Venture Global LNG Inc. last month signed two contracts to sell the fuel from its proposed facility in Louisiana to state-owned China Petroleum & Chemical Corp.

Henry Hub gas futures soared more than 9% Monday as forecasts for chilly November weather in the U.S. East heightened concern that supplies will struggle to meet demand this winter.

Shares of Cheniere gained 2.1% to $107.48 as of 11:06 a.m. in New York.

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