Feb 27 Private equity firm Blackstone
Group LP said on Monday it has agreed to invest $2
billion in Cheniere Energy Partners LP, in a deal that
would help the company finance construction of a
gas-liquefaction plant for export markets.
Houston-based LNG developer Cheniere will use the investment
to build its first export plant in Sabine Pass, Louisiana.
Blackstone's investment was made via special units in
Cheniere that will convert into common units once the facility
begins commercial operation. The special units will carry a
quarterly interest of 4.2 percent, paid out by issuing more of
The deal comes as U.S. producers are making moves to export
natural gas as huge increases in domestic production thanks to
shale development swamp the market, pushing gas prices way below
global levels. Buyers across the world have also lined up to buy
the cheap American fuel.
Indeed, Cheniere had originally planned to use the Sabine
Pass site to import liquefied natural gas, but shifted the
project in order to allow it to export the fuel as North
American natural gas prices plummeted.
Cheniere Energy Partners is a master limited partnership
(MLP) run by Cheniere Energy Inc. Cheniere Energy Inc
currently owns 88.8 percent of the partnership.
Cheniere plans to break ground on its Sabine Pass project in
April, pending final regulatory approval from the federal energy
regulator and financing for the project.
The company said debt financing for the project is expected
to be completed by the end of the first quarter. Construction is
expected in the first half of 2012 and exports are anticipated
to begin in 2015.
LNG is natural gas cooled to become a liquid so it can be
Cheniere is developing the first two of four liquefaction
facilities at the site. The cost of the first two liquefaction
facilities is expected to be $4.5 billion to $5 billion,
Under the deal, Blackstone will also appoint four directors
to the board of the MLP's general partner.
The company has signed a string of long-term export deals
with buyers across the globe in the past few months, from Spain
to India to South Korea, which has boosted Cheniere shares and
improved its chances of securing financial backing for the
Various plans to export LNG from the United States have
raised concerns that natural gas prices may increase for the
A study last month by the Energy Information Administration
found that prices could rise by 3 to 9 percent over 20 years if
exports go ahead.
Shares of Cheniere Energy Inc closed up 11.8 percent at
$15.71, while shares of Cheniere Energy Partners rose 13.4
percent to $23.70. Both companies are listed on the American