BG Group Signs Long-Term US LNG Purchase Agreement

BG Group said Wednesday that it has signed a fully-termed sale and purchase agreement with Sabine Pass Liquefaction, LLC, a subsidiary of Cheniere Energy Partners, L.P., for the purchase of 3.5 million tonnes per annum (mtpa) of liquefied natural gas (LNG) over a 20-year period from the Sabine Pass LNG terminal located in Louisiana, USA.

The agreement, which is subject to certain conditions and approvals, is the first long-term LNG purchase agreement from a project on the US Gulf Coast, allowing BG Group to secure LNG volumes for export from the US to international gas markets. LNG exports are expected to commence as early as 2015.

Construction of the liquefaction facilities at Sabine Pass is expected to commence in 2012, with the initial phase to consist of two trains capable of producing up to 9 mtpa of LNG. BG Group is not an investor in the proposed liquefaction facilities.

BG Group Chief Executive Sir Frank Chapman said, “This is a ground-breaking agreement for BG Group, giving us first-mover advantage in securing LNG export volumes from the US Gulf Coast. It is the first agreement of its kind in this region and it secures us early access to the rapidly emerging commercial opportunities driven by the recent material increases in US gas reserves.

“We are delighted to have signed this landmark deal for BG Group in a market and a country where we have been intimately involved, throughout the gas chain, for a decade. It adds further diversity to our global LNG supply portfolio and builds upon our proven track record in capturing and developing new opportunities that continue to drive the global growth of our LNG business”.

BG Group is continuing to pursue an expansion of the Lake Charles LNG terminal, located in Louisiana, USA, to provide natural gas liquefaction services. Authorisation has been received from the US Department of Energy (DOE) to export up to 730 Bcf of natural gas per year (approximately 15 mtpa) from the Lake Charles LNG terminal to countries that have a free trade agreement in place with the US. The DOE is currently reviewing an application to export natural gas from the Lake Charles LNG terminal to countries that do not have a free trade agreement with the US.