Gaz de France and Cheniere in Win-Win Transatlantic LNG Agreements

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Researched by Industrial Info Resources (Sugar Land, Texas). Gaz de France (FR:GAZ) (Paris, France) will gain long-term access to the U.S. LNG market through a reciprocal agreement signed between the company and Cheniere Energy Incorporated (NYSE:LNG) (Houston, Texas). The 15-year agreements cover the delivery of 12 LNG shipments per annum to the Sabine Pass terminal, which is due to come on-stream soon. In turn, Cheniere will have an option to deliver twelve shipments per annum to the GDF at the Isle of Grain terminal in the U.K. In 2008-2009, GDF will have a 20-year access to regasification capacity of 2.4 billion tons per annum.

The agreements will allow both groups to develop transatlantic arbitrage capacity. GDF COO, Jean-Marie Dauger said, “As the largest European LNG operator, GDF is consolidating access to the Gulf of Mexico thanks to these agreements. The group is now present in all the major LNG markets and its fleet – which includes the two largest LNG carriers ion the world – enables it to proceed with arbitrages on the final destination of its cargoes. The operation is all the more promising as Chenieres is substantially developing its regasification capacity, thereby offering even better access to the American market.”

GDF is the largest European importer, and the world’s third largest importer of LNG, which accounted for 30% of the group’s long-term supplies in 2006.

Shell Energy Europe (NYSE:RDS.A ) (London, UK) and the Port of Marseille authorities have agreed to initiate the development of an LNG regasification terminal at Fos-du-Mer on the Mediterranean on France’s southeast coast. Facing a long permitting process the terminal is scheduled to have and initial capacity of 8 billion cubic meters per annum. The terminal will probably not be operational until 2015. It will add to Shell’s LNG portfolio with the Ionio LNG project under development in Sicily and potential capacity in the future at the Gate terminal in Rotterdam in the Netherlands.

The Shell project would have the same capacity as the Fos Cavaou terminal GDF and Total (NYSE:TOT) (France) are scheduled to bring into operation at the end of this year, which is near the Shell project site. Both the plants are larger than GDF’s existing terminal at Fos-sur-Mer.

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