BG Group strikes $8-bn shale gas export deal with Cheniere Energy
27 October 2011
BG Group, former British Gas of the UK has struck an $8-billion deal with US energy firm Cheniere Energy Partners, L.P to export shale gas from the US, the first such deal to export unconvential gas from the US Gulf Coast.
With gas prices currently the cheapest in the US, gas extracted from rocks in the US would be liquefied and exported to international gas markets including countries in Asia and Europe.
BG Group yesterday said that it has signed a sale and purchase agreement with Sabine Pass Liquefaction, a subsidiary of Houston-based Cheniere, for the purchase of 3.5 million tonnes per annum (mtpa) of liquefied natural gas (LNG) starting from 2015 over a 20-year period from the Sabine Pass LNG terminal located in Louisiana.
BG Group CEO, Sir Frank Chapman said, ''This is a ground-breaking agreement for BG Group, giving us first-mover advantage in securing LNG export volumes from the US Gulf Coast. It is the first agreement of its kind in this region and it secures us early access to the rapidly emerging commercial opportunities driven by the recent material increases in US gas reserves.''
The price of gas in the US is currently a quarter of the price in Asia and under the deal, Cheniere will sell LNG at 115 per cent of the US price plus a premium of $2.15 per million British therms.
Including $3 per 1,000 cubic feet (mcf) shipment cost, the US imported gas will be cheaper than gas in Asia or Europe. Asian spot prices for LNG are now around $17 per million British thermal units, while it is a little under $4 in the US.