IHS CERAWeek: Cheniere sends inaugural US LNG export cargo to Brazil

By Ben DuBose
Digital Editor

HOUSTON -- The first LNG cargo from Cheniere Energy's Sabine Pass LNG project will depart later today for Brazil, the president of Cheniere Marketing said at IHS CERAWeek.

Speaking on "gas day" at the annual energy conference, Cheniere's Meg Gentle showed the audience a picture and video of the loading of the first LNG vessel to leave the US.

"This is forever changing the global gas industry," Gentle said.

The first cargo was originally expected to be loaded in January, but it was delayed due to instrumentation issues. Even so, Sabine Pass is still starting up about two years before any other US project.

State-run Petrobras is scheduled to receive the first cargo, according to a report from news agency Bloomberg.

Bloomberg said the LNG shipment was agreed to Monday, citing a person familiar with the deal. Brazil has seen higher demand in the spring, owing to a drought, and the country has steadily increased its LNG imports in recent years after an agreement to buy gas from Bolivia by pipeline reached its limits.

Petrobras bought about 80 LNG cargoes last year, and it is expected to purchase around 50 cargoes this year, according to the Bloomberg report.

“The biggest buyer of LNG outside of the winter is Brazil first and Argentina second in the Atlantic Basin," Ted Michael, an analyst for energy data provider Genscape, told Bloomberg. “They buy LNG for gas-powered, air-conditioned power."

These initial exports are considered commissioning cargoes as part of the start-up process, thus allowing Cheniere to ensure that the terminal is fully operational.

Once that is complete, Cheniere will need approval from the US Federal Energy Regulatory Commission (FERC) to export the terminal commercially.

In her commentary at CERAWeek, Gentle said she remained upbeat about the overall growth of the global LNG market, noting that conditions exist today to foster growth throughout global gas markets.

"We're not fearful," she said.

However, Gentle added that many new buyers are smaller and have poorer credit.

Going forward, Cheniere believes 50% of LNG sales will be sold on short-term contracts, compared to 30% today.

IHSCERAWeek continues through Friday at the Hilton Americas in downtown Houston.

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