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Cheniere Energy, Inc. LNG recently announced that in order to secure future liquefied natural gas (“LNG”) volumes, it has entered into a long-term Integrated Production Marketing (“IPM”) agreement with Canadian Natural Resources Limited CNQ. The deal, made through Cheniere Marketing, LLC, underscores a deepening partnership between upstream gas producers and global LNG marketers.
Insight Into the Agreement
Under the IPM agreement, a subsidiary of CNQ will supply 140,000 million British Thermal Units of natural gas per day to Cheniere Marketing over a 15-year term, starting in 2030. CNQ will serve as the guarantor for the agreement. The resulting LNG, amounting to approximately 0.85 million tons per annum (mtpa), will be marketed by Cheniere Marketing. Cheniere, currently carrying a Zacks Rank #3 (Hold), will pay a price linked to the Platts Japan Korea Marker, net of fixed shipping and liquefaction costs, ensuring pricing transparency and market alignment. This IPM agreement is contingent upon a positive Final Investment Decision (“FID”) for Cheniere’s Sabine Pass Liquefaction Expansion Project (SPL Expansion Project).
Overview of LNG’s SPL Expansion Project
The company, through its partners, is developing an expansion adjacent to the SPL Project, known as the SPL Expansion Project, with an anticipated production capacity of up to approximately 20 mtpa of LNG, including potential debottlenecking opportunities. By securing feed gas supply through long-term contracts, Cheniere is positioning itself to meet growing demand in Asia’s LNG markets and enhance the commercial viability of expansion plans.
In February 2024, certain subsidiaries of Cheniere Partners submitted applications to the Federal Energy Regulatory Commission for site approval to construct and operate the SPL Expansion Project. Additionally, these subsidiaries applied to the Department of Energy (“DOE”) for authorization to export LNG to both Free Trade Agreement (“FTA”) and non-FTA countries, excluding debottlenecking activities. In October 2024, the DOE granted authorization to export LNG to FTA countries. The development of this expansion project requires regulatory approvals and acceptable commercial and financing arrangements before the company makes a positive FID. Therefore, this deal with Canadian Natural Resources will serve as a base to secure a positive FID.
Key Picks
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