Cheniere Sells Out Two LNG Trains At Sabine Pass

Cheniere Energy is tantalizingly close to lining up the requisite commitments to underpin the first liquefaction phase at its Sabine Pass terminal in Louisiana, announcing a fully-termed sale and purchase agreement with BG Group for 3.5 MMt/y from train 1 on October 26 just as it puts the finishing touches on a second deal with Total for an equivalent amount from train 2. Unlike BG, who is buying its LNG on FOB terms and will not invest in the liquefaction facilities, Total will be both an offtaker and a partner in Sabine Pass Liquefaction LLC, apparently taking a material stake between 20% and 40% in the project. Phase 1 now involves the construction of two trains with nominal capacity of 4.5 MMt/y each, rather than the 3.5 MMt/y units cited by Cheniere as recently as August in a corporate presentation (see LNGWM, Sep ’11). A lump-sum turnkey construction package for these two trains has been negotiated with Bechtel as part of the project’s recently-completed front-end engineering and design. The results of the FEED exercise haven’t been announced, but soundings suggest a capital cost for the two trains of about $3.75 billion, or a little over $415 per ton of installed capacity for the initial 9 MMt/y phase. With two large balance sheet customers in the bag, the developer should be able to secure the required financing. Total’s partnership position will also provide added comfort that Cheniere can meet its performance obligations, including sourcing the 1.4 Bcf/d needed from the domestic grid and operating the plant to a high standard. Download here