Cheniere Energy, Inc. ("Cheniere") (NYSE MKT: LNG) announced today that its subsidiary, Corpus Christi Liquefaction, LLC ("Corpus Christi Liquefaction"), has entered into a liquefied natural gas ("LNG") sale and purchase agreement ("SPA") with PT Pertamina (Persero) ("Pertamina") under which Pertamina has agreed to purchase approximately 0.8 million tonnes per annum ("mtpa") of LNG upon the commencement of operations from the LNG export facility being developed near Corpus Christi, Texas (the "Corpus Christi Liquefaction Project"). The Corpus Christi Liquefaction Project is being designed and permitted for up to three trains, with aggregate design production capacity of 13.5 mtpa of LNG.
Under the SPA, Pertamina will purchase LNG on an FOB basis for a purchase price indexed to the monthly Henry Hub price plus a fixed component. LNG will be loaded onto Pertamina's vessels. The SPA has a term of twenty years commencing upon the date of first commercial delivery and an extension option of up to ten years. Deliveries are expected to occur as early as 2018.
"Pertamina, an Indonesian state-owned energy company, is the first foundation customer for our Corpus Christi Liquefaction Project being developed in Texas. Indonesia has historically been one of the largest exporters of LNG and is now in the process of converting one of their export terminals into an LNG receiving terminal. Pertamina's SPA is the first long-term commitment made to procure LNG from the international market for delivery into Indonesia. We look forward to supplying LNG to meet Indonesia's growing energy needs and to supporting Indonesia's efforts to enhance its energy security," said Charif Souki, Chairman and CEO. "Furthermore, this SPA is a significant milestone for our project, and we are continuing to make progress. We are nearing completion of the regulatory process and are continuing to work towards finalizing additional commercial agreements. We expect to complete all necessary steps to begin construction on our second LNG export terminal by the second half of 2014."
The SPA is subject to certain conditions precedent, including but not limited to Corpus Christi Liquefaction receiving regulatory approvals, securing necessary financing arrangements and making a final investment decision to construct the first train of the Corpus Christi Liquefaction Project (the "Corpus Christi FID"). Additionally, under a separate Omnibus Agreement, in the event that a final investment decision to construct Train 6 of the Sabine Pass Liquefaction Project is made prior to the Corpus Christi FID, and upon approval of the required parties at Cheniere Energy Partners, L.P., Pertamina and Corpus Christi Liquefaction will terminate the SPA and Pertamina and Sabine Pass Liquefaction will enter into an SPA for an equivalent amount of LNG from the Sabine Pass facility.