BASF to buy LNG from Cheniere’s Sabine Pass expansion project
BASF to buy LNG from Cheniere's Sabine Pass expansion project - Offshore Energy
BASF to buy LNG from Cheniere’s Sabine Pass expansion project
Cheniere Energy, through its subsidiary Cheniere Marketing, has signed a long-term LNG sale and purchase agreement (SPA) with German-based chemical producer BASF.
Under the agreement, BASF will purchase up to approximately 0.8 million tonnes per annum (mtpa) of LNG from Cheniere’s Sabine Pass Liquefaction Expansion Project (SPL Expansion Project) in Louisiana.
According to Cheniere, deliveries will commence in mid-2026 and, subject to a positive final investment decision with respect to the first train of the project, will increase to approximately 0.8 mtpa upon the start of commercial operation of the first train.
The term of the agreement extends through 2043.
“We are pleased to enter into this long-term relationship with BASF, a global leader in the chemical industry,” said Anatol Feygin, Cheniere’s Executive Vice President and Chief Commercial Officer. “This SPA demonstrates the critical role US natural gas plays in providing long-term secure, sustainable and affordable energy for Europe. With this agreement, we are supporting the objectives of one of Europe’s key industrial end-use consumers to ensure stability of its supply chain.”
“By establishing our own dedicated LNG supply chain with Cheniere, we are diversifying our energy and raw materials portfolio at a time of critical changes in the European gas market, which is marked by increased demand and volatile prices for LNG,” added Dirk Elvermann, BASF’s Chief Financial Officer. “While we are reducing our dependence on fossil fuels to reach our goal of net zero CO2 emissions by 2050, this agreement will ensure reliable supply of natural gas at competitive terms.”
The SPL Expansion Project is being developed for up to approximately 20 mtpa of total LNG capacity. In May 2023, certain subsidiaries of Cheniere Energy Partners, L.P. entered the pre-filing review process with respect to the SPL Expansion Project with the Federal Energy Regulatory Commission under the National Environmental Policy Act.
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Related Knowledge Center: Liquefied natural gas
Driven by plentiful natural gas produced from shale plays, the United States began exporting liquefied natural gas in 2016 when the Sabine Pass terminal in Louisiana opened and shipped its first cargo. Since then, additional capacity, or trains, have been added to Sabine Pass, and terminals have become operational in Cameron Parish, La.; Hackberry, La.; Cove Point, Md.; and Corpus Christi, Texas. The Energy Information Administration projects that U.S. LNG export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world, behind Australia and Qatar. The tariff war with China has the potential to impact some final investment decisions for additional terminals in the coming months.