Cheniere Lifted by LNG Market Movements

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

U.S. LNG exporter Cheniere Energy reported a 26% year-on-year increase in net income. LNG markets have been stimulated by the supply-side issues stemming from the conflict simmering in the Middle East.

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Steady Flows Supporting LNG

In the midst of ongoing supply issues and a geopolitical risk premium on market prices for LNG, Cheniere Energy said its net income during the third quarter increased 26% year-on-year.

Industrial Info is tracking the liquefied natural gas (LNG) portfolio for Cheniere Energy in the United States. Its Sabine Pass facility in Cameron Parish, La., started exports in 2016 and boasts six liquefaction units, or trains, that account for nominal production of around 30 million metric tons per annum (MTPA) of gas in the liquid form.

Operating since 2018, its Corpus Christi export facility has 10 trains that combine for 13.5 MTPA of liquefied natural gas (LNG), data from Industrial Info show.

On Thursday, the company reported net income of US$639 million, a 26% increase over the same period last year.

"The increases were primarily driven by higher total margins on LNG delivered, primarily driven by higher volumes recognized in income as well as higher margins per million British thermal units (MMBtu) of LNG delivered during the periods," the company explained.

Meanwhile, the number of cargoes of LNG delivered during the period remain unchanged year-on-year at 104, suggesting it was market factors more than volume that drove quarterly income higher.

Markets are under pressure from conflict simmering in the Middle East, which has curtailed maritime shipments of around a quarter of the world's crude oil and LNG deliveries. Exports from Qatar, a leading LNG producer in its own right, are limited because of the risk of moving cargo through the Strait of Hormuz.

Cheniere and Others Catch Market Tailwinds from Qatar's Reduced LNG Capacity

Cheniere last week signed an offtake agreement with QatarEnergy to supply 4 MTPA of LNG through 2054. Deliveries would move from Cheniere's terminals on behalf of QatarEnergy.

Elsewhere on Thursday, Australian energy company Woodside signed a long-term sales and purchase agreement with QatarEnergy to offer 3 MTPA from the Louisiana LNG terminal, which is under construction. "It is a strong vote of confidence in Louisiana LNG and represents a significant step in building the project's long-term customer base," Chief Executive Officer Liz Westcott said in a statement.

Woodside hired Bechtel to perform engineering, procurement and construction (EPC) services for its Louisiana LNG facility, where Industrial Info expects to see construction completed by 2030. Backed by an estimated $4 billion in investment value, the plant could export as much as 5.2 million tons of LNG per year, data show.

U.S. Looks to be an LNG Safety Net

U.S. LNG supplies offer Qatar a source diversification by drawing on deliveries from outside the Persian Gulf region to make up for Qatar lost domestic capacity. QatarEnergy, which saw its major LNG infrastructure heavily damaged early in the conflict, recently told its European customers that cargoes could be delayed until December due to circumstances beyond its control.

The United States emerged as the world leader in LNG exports in 2022, just as the global market was adjusting to the loss of Russian gas due to sanctions imposed over the invasion of Ukraine.

Now, those molecules are helping to support the various supply-side issues stemming from conflict in the Middle East. In its NATGAS Today report for Thursday, Industrial Info put total feed gas volumes supporting LNG exports at 19.78 billion cubic feet, close to a record high.

"Total feedgas reaches its third-highest level on record, approaching the October 18 peak of 19.87 Bcf/d," the report read.

Cheniere's terminal at Sabine Pass, the largest by export volume, and Corpus Christi are both slated for expansion. That comes amid a proposal by the U.S. Transportation Department to fast-track the approval process for LNG projects.

"The only thing standing in our way is outdated red tape," said Transportation Secretary Sean P. Duffy.

Key Takeaways

• Qatar offsetting its own supply-side issues with U.S. offtake agreements
• QatarEnergy told its European customers for LNG that deliveries could be delayed to December

By the Numbers

• 19+ Bcf/d in U.S. feed gas continues to support LNG exports
• 3 MTPA from the Louisiana LNG terminal set aside for Qatar

About Industrial Info Resources

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).