Chesapeake, Delfin and Gunvor ink long-term LNG liquefaction offtake deal
Chesapeake, Delfin and Gunvor ink long-term LNG liquefaction offtake deal - Offshore Energy
Chesapeake, Delfin and Gunvor ink long-term LNG liquefaction offtake deal
Chesapeake Energy Corporation, Delfin LNG, a subsidiary of Delfin Midstream, and Gunvor Group, through Gunvor Singapore, have entered into a liquefied natural gas (LNG) export deal that includes executed sales and purchase agreements (SPA) for long-term liquefaction offtake.
Under the SPA, Chesapeake will purchase approximately 0.5 million tons per annum (mtpa) of LNG from Delfin at a Henry Hub price and contract targeted start date in 2028, then deliver to Gunvor on a free-on-board (FOB) basis with the sales price linked to the Japan Korea Marker (JKM) for a period of 20 years.
Chesapeake noted that these volumes will represent 0.5 mtpa of the previously announced up to 2 mtpa heads of agreement (HoA) with Gunvor.
Nick Dell’Osso, Chesapeake President and CEO, said: “Today’s announcement cements an important step on our path to ‘Be LNG Ready’… We are pleased to formalize our agreement which provides diversification and access to global LNG pricing while enabling the delivery of affordable, reliable, lower carbon energy to markets in need.”
Dudley Poston, Delfin CEO, commented: “We believe our unique liquefaction solution provides Chesapeake with commercial flexibility with a reduced environmental footprint while providing a much-needed source of additional supply to key U.S. allies and the global LNG market.”
Kalpesh Patel, Co-Head of LNG Trading and a member of the Executive Committee of Gunvor, stated: “This deal represents an important step in finalizing the 0.5 mtpa out of our total of 2.0 mtpa arrangement with Chesapeake while expanding our existing cooperation with Delfin… Gunvor looks forward to establishing additional agreements with the companies in the near future.”
To remind, Chesapeake and Gunvor signed the above-mentioned HoA at the beginning of 2023. At the time, Gunvor said the companies will jointly select the most optimal liquefaction facility in the U.S. to liquefy the gas produced by Chesapeake and deliver the LNG to Gunvor on a FOB basis with a targeted start date in 2027.
At the end of 2023, Delfin Midstream entered into a long-term LNG sale and purchase agreement (SPA) with Gunvor, adding the latter to the list of buyers from the Delfin Deepwater Port LNG export facility. The deal was signed on a FOB basis for a minimum duration of 15 years.
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.