Cheniere Energy’s LNG contract with GAIL
Recently, Cheniere Energy (LNG) started its 20-year LNG (liquefied natural gas) contract with GAIL India. Under the contract, Cheniere Energy would supply 3.5 mtpa (million tonnes per annum) of LNG to GAIL from Train 4 at the Sabine Pass. Overall, Cheniere Energy has over 20 mtpa of “take-or-pay” style commercial agreements at Sabine and over 10 mtpa of similar agreements at Corpus Christi. Cheniere Energy also completed an SPA with Trafigura and China National Petroleum.
What’s driving Asian LNG prices higher?
Asian LNG prices spiked due to supply disruptions after a plant was shut down in Papua, New Guinea. ExxonMobil (XOM) shut down its LNG plant in Papua, New Guinea following the recent earthquake. North Asian buyers including China and Taiwan are looking for cargoes from the spot markets. The rise in Asian LNG prices could benefit Cheniere Energy. However, the prices are expected to come down due to an expected fall in LNG demand amid a rise in temperatures across the North Asian region.
Higher LNG demand in Europe
Temperatures across most of Europe have come down late in the season due to strong Siberian winds. Lower temperatures led to a rise in natural gas demand and higher British spot natural gas prices. Cheniere Energy should benefit from the cold temperatures in Europe. However, we’ll have to wait and see how much Cheniere Energy can fulfill the rise in LNG demand from Europe amid storage tanks shutting down.
Next, we’ll discuss Cheniere Energy’s technical indicators.