Gazprom to buy entire LNG output from Cameroon plant

Gazprom has agreed to buy all of the liquefied natural gas (LNG) from an export plant in Cameroon due to start operating in 2017, said a Reuters report

Gazprom, the Russian company which is the world’s biggest gas producer, is aiming to boost its LNG portfolio as supply of the fuel increases and its share of the global gas trade becomes larger. Gazprom Marketing & Trading (GM&T) will take 1.2mn tonnes of LNG annually from the Perenco project being developed in Cameroon which is being developed by Golar LNG. The Norwegian shipping company is converting one of its LNG tankers into a floating production platform that will convert the gas into liquid form and ready it for export by ship to world markets.

Gazprom is allowed to ship the fuel anywhere in the world, as per the contract. According to sources cited in the Reuters report, GM&T is expected to sell the LNG into Atlantic markets, including Latin America, as well as to China.

The long-term LNG sale price has been set at 11.25 per cent of the price of Brent crude oil, on a free-on-board basis. The actual cost to Gazprom will depend on the price of crude in 2017, when the supply from Perenco starts.

“Despite a low price on the volumes from Perenco to Gazprom, we see the project as still delivering solid returns to Perenco, primarily due to the low cost of gas,” said Erik Stavseth, analyst at Arctic Securities.

Increasing supply combined with weak demand has pushed down LNG prices since they peaked in February, 2014.

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