(Reuters) - Cheniere Energy Inc said on Tuesday it had approved the construction of a third liquefaction unit, known as a train, at its Corpus Christi export terminal in Texas, the first new liquefied natural gas project to go ahead in the United States since 2015.
The positive investment decision on the 4.5 million-tonne per annum (Mtpa) LNG train comes as Washington and Beijing have stepped back from the brink of a trade war and agreed to hold further talks to boost U.S. exports to China.
China, which is turning to natural gas to reduce its dependency on coal for power, overtook South Korea last year to become the world’s No. 2 LNG buyer. Companies with U.S. projects say China could use LNG imports to reduce a trade surplus with the United States.
For its part, Cheniere signed long-term deals with China National Petroleum Corp (CNPC) in February, earmarking 1.2 Mtpa of the output from Corpus Christi Train 3 for the state-owned oil and gas firm.
“The CNPC contracts supported the building of this train,” said Cheniere spokesman Eben Burnham-Snyder, noting the project was also backed by offtake deals with trading house Trafigura and an earlier deal with EDP (Energias de Portugal).
The Houston-based company, which operates the Sabine Pass export terminal in Louisiana, had to finalize financing before formally moving ahead with the build. It did not provide details on the cost of the project, but Cheniere’s trains have averaged roughly $3 billion each.
The positive FID on Corpus Christi Train 3 could be the first of a number of big LNG go-ahead decisions this year. A shortage of the super-cooled gas is looming as soon as 2022, companies have said, prompting buyers to start signing onto the longer-term deals needed to support construction.
Cheniere itself is now marketing capacity on Train 6 at Sabine pass, competing with would-be producers like Venture Global LNG and Tellurian Inc.
“We continue to see significant tailwinds in the global LNG market and look forward to delivering additional growth and value to shareholders,” said Cheniere Chief Executive Jack Fusco in a statement.
The first two trains at Corpus Christi are expected to enter service next year. There is no timeline for the third train, though the builds generally take about four years each.
Reporting by Julie Gordon in Vancouver; Editing by Matthew Lewis