Sabine Pass Tolling Agreement

HOUSTON INTERVIEW (ICIS): U.S. supplier Sempra, which is currently building The Cameron LNG export plant in Louisiana, is moving away from the initial toll model from its first installment of contract to a free onboard model (FOB) or an ex-ship-delivered (DES) model, said the new president of its LNG division, Justin Bird. Eni SPA has signed agreements with Egypt, Egyptian general Petroleum Corp., Egyptian Natural Gas Holding Co. and Naturgy on restarting the 7.56 billion pound liquefaction plant in Egypt in the first quarter of 2021. « We see that the toll model is not the current model, » Bird told CIHI. Cheniere is also developing Corpus Christi Stage 3, an extension consisting of up to seven middle-class trains at Corpus Domini with an expected additional capacity of 10 million tpy. The company expects Level 3 construction to begin after an engineering, procurement and work contract, as well as additional sales contracts, and to obtain adequate financing. Bird stated that the energia Costa Azul agreements, Sempra`s liquefaction extension project in Ensenada, Mexico, and Port Arthur are based on the sales and sales contract (SPA) model and not on toll prices. The agreements for the Port Arthur, Texas project, a Greenfield project developed by Sempra, are based on an FOB model, which means that Sempra would assume the risk of supply and transportation. In its final agreement reached in December 2018 with the Polish historical company PGNiG, Sempra said port Arthur LNG would manage the transport, liquefaction and loading of the pipeline. The 20-year contract is for 2mtpa.

Cheniere, based in the United States, was the first LNG export developer to endorse this contractual structure for its long-time clients in the Sabine Pass and Corpus Christi projects. To do this, Cheniere has developed its own U.S. gas distribution team, entered into pipeline and inland gas transportation contracts, and is now the largest purchaser of natural gas in the United States. « We spent a lot of time in Sempra thinking about this transition [away from the toll model], » he said. Port Arthur received its Final Environmental Impact Statement (EFSI) from the Federal Energy Regulatory Commission (FERC) in January and is expected to receive its final FERC contract later this year, its non-free-trade (non-FTA) agreement from the Ministry of Energy (DOE).

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