Chile Just Gave Cheniere a Big Reason to Build Another LNG Plant

(Bloomberg) - Chile this week gave Cheniere Energy Inc. a good reason to build another plant to export U.S. natural gas by clearing the final environmental hurdle for a proposed floating import terminal.

Approval was granted for the Penco Lirquen LNG project, which comprises a floating storage and regasification unit, Juan Jose Gana, executive director of Biobiogenera SA, the developer behind the project, said in an e-mail Thursday. The 1,200-megawatt Central El Campesino power plant, which will be supplied by the gas import vessel, “should be approved” in July or August, he said. 

This approval marks a milestone for Cheniere, which has a 20-year agreement to supply gas to the power plant. Cheniere is also a co-owner of the LNG import project with Biobiogenera, according to Hoegh LNG Holdings Ltd., which is building the terminal.

Success in Chile may help Cheniere find other new buyers needed to sign long-term contracts before it makes a decision on an additional liquefaction plant at its Corpus Christi facility in Texas, according to Energy Aspects Ltd. and Hennessy Funds.

“This a positive development for U.S. exports,” Alex Tertzakian, an analyst with Energy Aspects in London, said by e-mail Thursday. Although the contract to supply the terminal and the connected power plant “is relatively small volume-wise,” the latest developments will “undoubtedly increase the chances” of Cheniere moving ahead with building the third liquefaction plant at Corpus Christi, he said.

Local Protests

Although it got the environmental nod, the project has stirred up controversy in the local community. Police used a water cannon to break up protests in the Chilean city of Concepcion on Tuesday after the regional environmental commission unanimously approved the LNG project, Radio BioBio reported on its website. Two local towns plan to team up to seek a court injunction to block the project, La Tercera reported, citing Valentina Escalona, the mayoress of Penco, 262 miles south of Santiago.

Cheniere did not respond to phone or e-mail requests seeking comment. Hoegh couldn’t be reached either.

Cheniere’s marketing unit has an agreement to supply to the El Campesino power plant with 32.3 million British thermal units a year, the equivalent of nine cargoes, the company said in a June 27 presentation. Shipments are slated to start in 2019 from Corpus Christi. This contract would represent about 17 percent of the marketing arm’s projected LNG available from seven liquefaction plants over two decades.

Cheniere has two liquefaction plants under construction at Corpus Christi. While a third one is fully permitted, the company said on its website it is seeking additional contracts before making a final investment decision. Cheniere is building four plants in Louisiana.

“The more contracts that they can sign up to service their growth for the Texas project, the better because they don’t have it fully subscribed,” said Skip Aylesworth, who manages $1.5 billion in holdings at Hennessy Funds in Boston. “They are trying to develop markets that are closer to Texas and Louisiana than Europe and Asia because the smaller they can make that transportation cost the more it helps them.”

- With assistance from Sebastian Boyd. To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net Stephen Cunningham, Richard Stubbe

Copyright 2016 Bloomberg News.

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE



Most Popular Articles

From the Career Center
Jobs that may interest you
Operations Shift Supervisor
Expertise: Gas Plant Operations|LNG|Refinery / Plant Operations Supervisor
Location: Quintana, TX
 
Sr. Process Engineer
Expertise: Process Engineer|Project Engineer|Refinery Specialist
Location: Salt Lake City, UT
 
Sr. Project Engineer
Expertise: Mechanical Engineering|Project Engineer|Refinery Specialist
Location: Mandan, ND
 
search for more jobs

Brent Crude Oil : $48.69/BBL 5.91%
Light Crude Oil : $47.05/BBL 5.32%
Natural Gas : $2.952/MMBtu 1.60%
Updated in last 24 hours