CVX Chevron Corporation

By Robb M. Stewart

Chevron Corp. has struck long-term deals to source liquefied natural gas from Cheniere Energy Inc., which Chevron said would allow it to harness growing U.S. natural gas production and Gulf Coast export capacity to meet long-term demand for the fuel.

Cheniere said two of its subsidiaries signed sale and purchase agreements that at the plateau would see Chevron buy a combined 2 million metric tons a year of LNG.

Under the first agreement, Chevron agreed to purchase about 1 million tons of LNG annually on a free-on-board basis, Cheniere said. Deliveries are set to begin in 2026, reach the full 1 million tons a year during 2027 and continue until mid-2042.

Under the second agreement, Chevron has agreed to buy about 1 million tons a year of LNG, with deliveries beginning in 2027 and continuing for roughly 15 years, Cheniere said. The agreement is subject to Cheniere making a positive final investment decision to construct additional liquefaction capacity at the Corpus Christi LNG terminal beyond the seven-train Corpus Christi stage three project, the company said.

The purchase price for LNG under the agreements is indexed to the Henry Hub price, plus a fixed liquefaction fee, Cheniere said.

Cheniere said its Sabine Pass LNG subsidiary and Chevron have additionally agreed to terms for the early termination of their LNG terminal use agreement in return for a lump sum payment to be made by Chevron this year.

The supply agreements underscore the growing demand for reliable LNG supply beyond 2040 and further support investment in additional LNG capacity beyond the Corpus Christi stage three project, Cheniere Chief Commercial Officer Anatol Feygin said.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

June 22, 2022 09:04 ET (13:04 GMT)

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