S&P Global Platts

Cheniere makes positive final investment decision to build third LNG train at Texas facility

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Source: S&P Global Platts

Houston -- Cheniere Energy said Tuesday it would build a third train at its LNG export terminal in Corpus Christi, Texas, the first positive final investment decision on liquefaction capacity in the US since 2015.

The board's move, while expected, is a welcome sign for a US market that has struggled to advance construction of further production units beyond the ones currently being built, amid struggles securing long-term agreements with offtakers sufficient to finance the projects.

In February, Cheniere said it had finalized two long-term supply deals with state-owned China National Petroleum that would support a third train at the facility in Corpus Christi, where the first two trains are already under construction. Together with earlier deals with Portugal 's EDP and commodity trader Trafigura, Cheniere has inked deals that would support about 2.97 million mt/year of Train 3's capacity of 4.5 million mt/year.

That's 66% of the capacity, compared with the roughly 87% of capacity that Cheniere has contracted for trains that are in operation or under construction at its Sabine Pass export terminal in Louisiana and at Corpus Christi. Cheniere has four trains in operation at Sabine Pass and a fifth being built. It is looking to commercialize a sixth train there.

In a statement announcing the positive FID on Corpus Christi Train 3, Cheniere said it plans to issue a full notice to proceed to its engineering contractor, Bechtel, to continue construction, which began in late 2017 under limited notice to proceed.

'We continue to see significant tailwinds in the global LNG market and look forward to delivering additional growth and value to shareholders,' CEO Jack Fusco said.

Cheniere said it closed Tuesday on previously announced credit arrangements that will be used to fund a portion of the cost of developing, constructing and placing into service Trains 1, 2 and 3 and associated pipeline and other infrastructure at or near the Corpus Christi terminal.

Earlier in May, Cheniere reported record profits on the strength of Asian LNG prices. Two years after it ushered in the first US exports of LNG produced from shale gas with its Louisiana terminal's startup, the Houston-based company believes its brightest days may be ahead.

Whether the market fundamentals benefitting Cheniere will translate to other developers that are bringing their facilities online this year and next year, or are proposing new terminals, remains to be seen. For its part, Cheniere raised its earnings expectations for the full year and said it was ahead of schedule building its remaining trains under construction.

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