Cheniere Energy exports first cargo from LNG terminal in Texas
A tanker loaded with the first cargo from Cheniere Energy’s LNG export terminal near Corpus Christi, Texas, departed on Tuesday. The development makes Cheniere the only major US exporter of LNG produced from shale gas to ship a cargo from two different terminals. Its Sabine Pass export terminal in Louisiana shipped its first cargo in 2016. The US is poised to become a much bigger player in the global supply of LNG. Cheniere and Dominion Energy are both exporting LNG produced from shale gas, and three more developers are expected to have export terminals up and running next year in Texas, Louisiana and Georgia. The Tsakos Shipping & Trading-owned Maria Energy tanker arrived at Cheniere’s Texas facility on December 1, and remained moored there for 10 days before departing at about 8 a.m. local time. It was not immediately clear where it was headed, as it moved swiftly through the Gulf of Mexico. The captain’s destination was changed to TBC, for to be confirmed, S&P Global Platts Analytics’ vessel-tracking tool cFlow shows. Destinations of LNG spot cargoes are often determined while in transit, and they can often change, depending on where the shipper expects to receive the best netback. At an event at the terminal on November 15 to mark the startup of LNG production the day before, CEO Jack Fusco said it was likely the first cargo would go to the Far East. But, LNG market economics have been volatile in recent weeks and have changed since then. Cheniere’s first cargo from Sabine Pass was shipped to South America. LNG netbacks to the Corpus Christi export terminal have been declining steadily since early-September, as global demand has waned and US domestic gas prices have run up. Europe has recently emerged as the premier destination for US LNG, with UK NBP netbacks to the Corpus Christi terminal estimated at $1.46/MMBtu, roughly $0.50/MMBtu stronger than the current netback to Platts JKM, the benchmark price for spot LNG in Northeast Asia, Platts Analytics data shows. Platts Analytics assumes that contracted LNG will still dispatch when LNG netbacks are above $0/MMBtu, because short-run marginal costs are covered in the trade. However, initial commercial capacity at Corpus Christi Train 1 will be controlled by Cheniere Marketing, until the long-term contracts on that train come into force in the third quarter of 2019. Perhaps underscoring the market fundamentals at play, almost a month elapsed between the time Cheniere began producing LNG at Corpus Christi and when its first cargo departed. Initial cargoes are considered to be commissioning cargoes, as the operator, and its contractor, test the full range of capabilities of the terminal. Commercial operations would begin after commissioning is done. Long-term offtake agreements with Cheniere will begin later. Cheniere has two more liquefaction trains under construction at the Corpus Christi terminal. It has five trains in operation at Sabine Pass and has proposed a sixth train, subject to commercialization.