DIVERSIFICATION:The deal is an important part of Taiwan’s efforts to reduce its trade surplus with the US and boost the two nations’ trade relations, a source said.
US liquefied natural gas (LNG) company Cheniere Energy Inc said it had signed a 25-year deal to supply CPC Corp, Taiwan that CPC valued at about US$25 billion.
Cheniere is to sell 2 million tonnes of LNG per year on a delivered basis to the state-owned oil and gas company, starting in 2021, it said, adding that the purchase price would be pegged to the Henry Hub monthly average, plus a fee.
The US$25 billion figure was based on current prices, CPC said in a statement yesterday, without providing a monetary figure.
“Most importantly, it helps to further achieve the diversification of LNG sources and stability of energy supply into the Taiwan market that are among CPC’s key objectives,” CPC chairman Tai Chein said.
LNG buyers see Qatar, Australia and the US as leading suppliers in the future, Tai said, adding that CPC has been importing substantial volumes from Qatar and Australia.
The deal is also viewed as an important part of Taiwan’s efforts to reduce its trade surplus with the US, a source familiar with the government’s thinking said.
The contract is a significant boost to Taiwan’s trade relations with the US, particularly given the Trump administration’s focus on trade with Asia, the source said.
The US has become a major LNG exporter in the past two years, mostly due to the ramp-up of Cheniere’s Sabine Pass terminal in Louisiana. The Houston-based company is also building the Corpus Christi terminal in Texas.
The CPC deal, which is through Cheniere’s marketing arm, is not tied to a particular project or liquefaction train.
The agreement ties up a portion of its portfolio volume on a long-term basis with an investment-grade counterparty, Cheniere said, adding that it retains the ability to use those volumes to support a future train or expansion project.
Cheniere announced in May that it was moving ahead with a third liquefaction train at its Corpus Christi project. It is marketing its sixth train at Sabine Pass, with an investment decision expected next year.
Taiwan is the fifth-biggest importer of LNG worldwide, shipping in about 16.8 million tonnes last year, giving it a global import market share of almost 6 percent, the International Gas Union said.
The deal comes just a day before President Tsai Ing-wen embarks on an overseas trip to visit diplomatic allies via transit stops in the US, which will be in Los Angeles and Houston, where many Taiwan businesspeople work in the energy sector. |
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