* LNG exports from Sabine Pass to start in January
* To offer one spot cargo per month from December
* Current prices do not justify new projects globally
(Adds detail and further comment)
By Florence Tan
SINGAPORE, Oct 26 Cheniere Energy expects to
start receiving natural gas to convert into super-chilled liquid
fuel at its first U.S. LNG export terminal before the end of the
year, with shipments to start in January, its chief executive
said on Monday.
Cheniere's plant will mark the first exports of cheap and
abundant U.S. shale gas as liquefied natural gas (LNG), adding
to a huge boost in output out of Australia as well.
The ample supplies, combined with slowing growth in China
and falling demand in top importers Japan and South Korea, have
cut prices and prompted a battle for market share.
First natural gas supplies will arrive at its U.S. LNG plant
this year, Chief Executive Officer Charif Souki told reporters
on the sidelines of Singapore International Energy Week.
"We will ship our first cargo sometime in January."
Spot LNG prices in Asia LNG-AS have tumbled by half from a
year ago, narrowing the gap with U.S. benchmark prices. Tracking
the plunge in energy prices, Cheniere's shares are down
by almost half from their peak in 2014.
Once Cheniere's first LNG plant starts up, the company will
have a new production train starting up every six months until
mid-2019, leaving it with seven total lines of gas liquefaction
at its Sabine Pass project in Cameron Parish, Louisiana, and at
another terminal in Corpus Christi, Texas.
The seven trains will account for almost half of the 65
million tonnes per year (tpy) of LNG export capacity under
construction in the United States.
Cheniere has sold most of its 31.5 million tpy of LNG via
long-term contracts, with about 4 million tpy remaining for sale
in spot markets, Souki said.
The company plans to start offering a cargo a month from
December, he said, hoping this will improve market liquidity.
The company is permitted to build another two trains, but
has yet to take investment decisions.
The current pricing structure is not a strong argument for
building further LNG plants, Souki said, with any projects
needing at least $8 per million British thermal units (mmBtu) to
sell to Europe and $9 per mmBtu to sell to Asia.
"I'm pretty sure the market will come back," he said,
however, adding that Cheniere has applied for permits to build
"You don't make a decision like this based on what's
happening in the next six months. You make a decision based on
what you think is going to happen over the next 20 years."
For any trains beyond the seven that have been committed to,
Cheniere would not have to sell the gas until 2020-2021, Souki
said, giving it time to wait until LNG prices recover.
(Editing By Tom Hogue)