In February 2003, Cheniere sold 60% of its Freeport project to Freeport LNG Investments, LLC, a company controlled by Michael S. Smith, in exchange for $5,000,000 payable over time and a commitment to contribute $9,000,000 for development costs of the project. Cheniere also sold 10% of Freeport LNG to Contango Oil & Gas Company for $2,333,000.
In March 2003, Freeport LNG submitted an application with the Federal Energy Regulatory Commission for the construction of a terminal designed for 1.5 billion cubic feet per day (Bcf/d) of regassification capacity on Quintana Island in Freeport, Texas.
Charif Souki, CEO of Cheniere said, "In the last few months we have experienced a strong level of interest in all three of our facilities - Freeport, Sabine Pass and Corpus Christi. Currently Freeport is the only facility offering capacity for sale, and this agreement represents one third of its capacity. We are beginning to see a trend where gas users in the US are no longer satisfied to depend on traditional suppliers for their gas needs and are beginning to take matters into their own hands. This was first evidenced by Sherwin Alumina electing to participate in the equity of our Corpus Christi facility, and now, by Dow electing to secure its own capacity in Freeport. We have received several inquiries from other industrials and power generators all seeking to secure long-term gas supplies. This marks a departure from the traditional model where owners of stranded gas around the globe were looking for outlets into the vast US market.
Cheniere's interest in three terminals on the Gulf Coast with a total capacity over 6 Bcf/d will allow gas users to diversify their supply sources and offer suppliers the opportunity to access the US market.
More than ever, we think it is critical to move expeditiously. We expect to file applications with FERC for Sabine Pass and Corpus Christi in January 2004 and to have all three terminals operational in 2007."
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