February 8, 2016 / 9:50 PM / 4 years ago

Cheniere Energy scraps its crude trading desk

HOUSTON, Feb 8 (Reuters) - Cheniere Energy is closing its newly formed crude oil trading desk, according to several sources, just two months after its board voted to replace the company’s chief executive to focus more closely on its core businesses.

The liquefied natural gas (LNG) company, best known for taking the lead on U.S. LNG exports at its costly Sabine Pass terminal at the Texas and Louisiana border, had planned to pursue condensate exports with the development of a $550 million storage and dock facility near Corpus Christi, Texas.

In mid-2015, the company launched a crude trading and origination desk by hiring Nelson Lee from BHP Billiton, where he had helped orchestrate some of the first-ever exports of U.S. condensate, a very light form of crude.

It was not immediately clear how many traders and support staff would be laid off as a part of the closure.

Sources confirmed that Lee and a second trader, Robert Harris, would be leaving the company.

Cheniere’s board in mid-December voted to fire CEO Charif Souki at the urging of activist investor Carl Icahn, who had taken a big stake in the company.

The board made the decision after reevaluating Souki’s plans to expand the company’s scope beyond exporting liquefied natural gas.

As recently as September, Cheniere had publicly discussed the development of the proposed condensate terminal, but presentations published by the company in the past few months made little to no mention of it.

If completed, the export terminal would be operational by 2017 and include up to 2 million barrels of storage as well as docks capable of handling Aframax-sized vessels.

A spokesperson for the company did not respond to a request for comment on the project. But sources said at best the project was on hold.

Cheniere’s stock is down 38 percent year-to-date. On Monday the stock briefly traded below $23, its lowest level since March 2013, before closing at $23.65.

As of Dec. 7, Icahn was Cheniere’s second largest investor, with a 13.8 percent stake, or 32.65 million shares, according to data available on Reuters Eikon. (Reporting by Liz Hampton and Kristen Hays; Additional reporting Catherine Ngai in New York; Editing by Terry Wade and Leslie Adler)

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