A new liquefied natural gas (LNG) supply deal could point to huge potential market growth for U.S.-produced LNG in Asia.
A subsidiary of Houston-based LNG infrastructure firm Cheniere Energy has signed a 13-year supply deal with Singapore’s ENN LNG. The agreement calls for ENN to purchase nearly 1 million metric tons of LNG per year from Cheniere beginning July 2022 through 2035.
Cheniere owns and operates natural gas transport and pipeline systems culminating on LNG export terminals on the U.S. Gulf Coast. Natural gas is chilled to liquefy it and make it stable for shipping.
“We are pleased to announce this long-term LNG contract with ENN, a major player in China’s rapidly growing natural gas market, and we look forward to a successful, long-term relationship with ENN as a customer,” said Jack Fusco, Cheniere’s President and Chief Executive Officer. “This SPA underscores the strength of the global LNG market today, particularly in China.”
LNG is shipped around the world and then deliver to re-gasification facilities, where it can be used as power generation, heating or transportation resource.
China is a key potential market for imported LNG as it works to shift its power generation mix from primarily coal to lower carbon emitting resources such as gas, nuclear and renewables. The nation’s vow to cap its emissions growth by 2030 is pushing China’s energy leaders to embrace natural gas, which emits about 50 percent less greenhouse gases than coal.
There is certainly plenty of room for growth of the gas-fired portfolio: China’s installed gas-fired capacity stood at about 97 GW as of one year ago—accounting for only 3.2 percent of the nation’s generation mix, according to a report by the Oxford Institute for Energy Studies in December 2020.
China could add close to 50 GW of gas-fired generating capacity by 2025, according to the Oxford forecast.
Other research indicates that China’s LNG terminals received about 87 million tons last year, a year-over-year increase of 14 percent. The Chinese LNG import total could approach 180 million tons annually by 2025, according to Bharat research.
Cheniere Energy has completed numerous LNG export terminals and is close to completing the sixth train at its Sabine Pass Gulf Coast terminal by the first half of 2022.