Gulf Coast LNG offtake boom slows significantly in 2023 | Enverus

In the first nine months of 2023, U.S. LNG developers signed 14 long-term sales and purchase agreements totaling 19.65 mtpa. The pace is far slower than in 2022 when Russia’s invasion of Ukraine led European countries to scramble for future supplies not shipped from Moscow. The first nine months of 2022 saw 30 SPAs totaling 35.0-35.5 mtpa, and the full year brought 38 agreements totaling 48.53-49.03 mtpa. Q3 of this year was particularly slow, with only two SPAs signed.

Q1-Q3 SPA tally is down 53% by number of contracts, 44% by volume YOY.

European buyers contracted 35% of the 1Q23-3Q23 long-term SPA volumes. Asian buyers came in second at 31%, while supermajors and majors snagged 27% and merchants and traders locked in 7%. This compared to a 2022 breakdown of 38% supermajor/major, 32% Asian, 21% European and 9% merchant/trader.

Venture Global LNG has signed the most long-term SPAs in the first nine months of 2023 at five, totaling 5.95 mtpa – two SPAs covering 1.7 mpta for Plaquemines LNG and three SPAs covering 4.25 mtpa. Counterparties are Germany’s state-owned Securing Energy for Europe, The Woodlands-based global LNG shipper Exelerate Energy, and Asian firms JERA and China Gas. These deals follow a banner 2022 when the company signed 13 SPAs totaling 12 mtpa.

Venture Global’s Plaquemines LNG facility will be capable of exporting up to 20 mtpa produced by 36 trains. An FID for the 13.3 mtpa Phase 1 was made in May 2022, and Phase 2 sanction followed this March. FERC issued the final EIS for the 20 mtpa CP2 facility in late July and could authorize the project before year’s end. CP2 will have 18 modular trains, twice as many as the operational 10 mtpa Calcasieu Pass LNG facility Venture Global built next door. Calcasieu Pass is still in the commissioning phase despite exporting 90 cargos in the first seven months of 2023, according to Department of Energy data.

Venture Global signed most SPAs YTD; NextDecade locked in most volumes.

Four of the 2023 agreements were secured by Cheniere Energy, totaling 4.7 mtpa. Signed with European firms BASF and Equinor and Asian firms ENN and Korea Southern Power, the agreements support expansions of the company’s existing Corpus Christi and Sabine Pass facilities. Cheniere pre-filed with FERC in February for Sabine Pass Stage 5, which will add up to three trains totaling up to about 20 mtpa. Sabine Pass currently has 30 mtpa of capacity from six trains.

At Corpus Christi, Stage 3 project is under construction after Cheniere made an FID in June 2022 for the seven-train, over 10 mtpa expansion. The capacity, expected in 2025, will add to the original three trains’ 15 mtpa. But that’s not all. Cheniere filed an application with FERC in March to add two more trains, CCL Midscale Trains 8 and 9, with 3 mtpa of capacity. In 2022, Cheniere signed five SPAs totaling 7.85 mtpa.

Despite only signing two SPAs through Q3 this year, NextDecade’s tally of 6.4 mtpa is volumetrically more than its competitors’ tally and follows six SPAs totaling 7.75 mtpa in 2022. TotalEnergies signed up for the bulk of the 2023 SPA volumes, at 5.4 mtpa, while Japan’s Itochu signed for the rest. NextDecade will supply the volumes from its 27 mtpa Rio Grande LNG project in Brownsville, Texas. The company made an FID for the project’s three-train 17.6 mtpa Phase 1 in July, and the first train should be substantially complete in 2027.

So far this year Delfin Midstream also signed two SPAs, one with European firm Centrica and one with commodities firm Hartree Partners, with the contracts covering 1.6 mtpa and adding to one SPA covering 0.5 mtpa signed in 2022. Unlike the other projects with offtake agreements, which are land-based, Delfin is developing a floating LNG seaport project. If fully developed, Delfin LNG is designed to accommodate up to four FLNG facilities to produce up to 13.3 mtpa. The company said it is in the final phase ahead of an FID for the first two FLNG vessels and is accelerating the development of the remaining FLNG slots in light of a strong market outlook for cleaner-burning fuels in Asia and continuing strong demand in Europe. First LNG is targeted for 2027.

FIDs YTD are Venture’s Plaquemines Ph. 2 & NextDecade’s Rio Grande Ph. 1.

Sempra Infrastructure may have only signed one SPA for 1 mtpa this year, with PKN Orlen, but the company had already locked in three long-term agreements totaling 8.28 mtpa in 2022 for its Port Arthur LNG project in Jefferson County, Texas. It made a positive FID in March for the two-train, 13 mtpa Phase 1, whose first train is set to come online in 2027. A two-train Phase 2 is currently being marketed and was recently authorized by FERC.

Despite a lack of sales and purchase agreements signed this year, Commonwealth LNG and Lake Charles LNG have made notable progress. The proposed six-train, 9.3 mtpa Commonwealth project in Cameron, Louisiana, was authorized by FERC in November 2022. At that time, the company had already signed SPAs covering up to 2.5 mtpa over 20 years with Woodside Energy. So far in 2023, Commonwealth has entered heads of agreements for 4 mtpa of long-term supply, one for 1 mtpa for 20 years with MET Group, one with Kimmeridge Energy Management for 2 mtpa over 20 years, and one with EQT Corp. for 1 mtpa over 15 years. The latter two agreements include feedgas supply to the project. Kimmeridge is also providing development capital and Commonwealth says it now has sufficient financial commitment to reach FID. That’s targeted for 1Q24, with startup anticipated in 2027.

Lake Charles and Commonwealth LNG have made notable progress this year.

The situation surrounding Lake Charles LNG is a bit more complicated. The U.S. Department of Energy denied Energy Transfer’s application for a three-year extension of its existing license to export to countries that don’t have free trade agreements with the U.S., leaving the startup requirement at Dec. 16, 2025. ET anticipates that startup will occur in 2028, so that deadline is not feasible, and the company in August filed for an expedited non-FTA export license, to be issued by February.

Despite the regulatory uncertainty, ET signed HOAs covering tolling agreements with EQT and Chesapeake Energy that envision each E&P company providing 135 MMcf/d of feedgas supplied to Lake Charles and offtaking 1 mtpa for 15 years, or 2 mtpa combined. Further HOAs cover 1.6 mtpa over 20 years to a Japanese consortium and 1 mtpa for 15 years to an unnamed U.S. firm. In 2022, six SPAs covering 7.9 mtpa were signed for Lake Charles. If the HOAs are all converted to SPAs, ET will have 12.5 mtpa in long-term offtake lined up for the project. When fully developed, Lake Charles will have three trains with a total of 16.5 mtpa of capacity.

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