November 21, 2011 / 9:57 PM / 8 years ago

UPDATE 2-Cheniere signs second U.S. LNG export deal

* Cheniere to sell 3.5 mtpa of LNG to Gas Natural Fenosa
    * Deal lasts for 20 years
    * Cheniere closer to financing Sabine Pass export plant

    By Edward McAllister
    NEW YORK, Nov 21 (Reuters) - Cheniere Energy moved a step
closer on Monday to exporting U.S. shale gas across the globe,
announcing a second supply deal that could secure financing for
the first U.S. gas export plant in nearly 50 years.
    Under the $9 billion, 20-year agreement with Spain's Gas
Natural Fenosa , Cheniere will sell 3.5 million
tonnes per year (mtpa) of liquefied natural gas for shipment
overseas from Sabine Pass in Louisiana by 2016.
    It follows a similar deal inked with BG Group in
October and will help Houston-based Cheniere reach a final
investment decision on the proposed project by early next year,
pending regulatory approval.
    "Sabine Liquefaction has now reached its contract capacity
target of 7.0 mtpa, which is expected to support the
construction of the first two trains," Cheniere said in a
statement.
    LNG is natural gas cooled to a liquid for shipping
overseas.
    Gas Natural Fenosa will pay Cheniere about $454 million per
year for use of the terminal, construction of which could begin
in 2012. It will buy LNG from Cheniere at a 15 percent premium
to U.S. benchmark futures at Henry Hub.
    The deals mark a turnaround for a U.S. natural gas market
swamped by huge rises in shale gas production that have sent
prices plummeting way below global levels.
    Record U.S. natural gas production has led to a series of
rival export proposals hoping to sell LNG to higher-paying,
thirsty markets in Asia and Europe.
    Five projects across the United States and two in western
Canada have applied for construction and export licenses,
seeking long-term deals predominantly with buyers in Asia where
prices are four times higher than those in the United States.
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