Commonwealth LNG finds European demand for gas from Louisiana terminal -CEO

TOKYO,  (Reuters) - Commonwealth LNG has received commitments from European buyers to take almost half of the liquefied natural gas (LNG) from its planned 8.4-million-tonnes-per-year export terminal in Louisiana, Chief Executive Officer Paul Varello said.

The Commonwealth project is one of more than 10 LNG export terminals under development or construction in the United States along the coast of the Gulf of Mexico to take advantage of soaring demand for the supercooled fuel amid booming gas production.

"We are exchanging documents with counterparties that will represent three to four million tonnes" of capacity, Varello told Reuters in an interview, adding he expects to sign so-called heads of agreements (HoA) shortly.

"We have to work hard to get closer to the full 8 million tonnes in heads of agreements to allow us to feel good about getting 6 million tonnes in final agreements," he said, because prospective buyers are overcommitting to projects.

"Our bankers say that if we can decent pricing with 6 million tonnes that will give us enough debt coverage to make it work," Varello said.

The prospective buyers are European end-users with their own importing terminals, he said.

Varello said the company will process natural gas into LNG at the terminal at "well below" $2.50 per million British thermal units for buyers signing 20-year supply contracts.

The company expects to make a final investment decision by the third or fourth quarter of next year after getting final environmental approvals and aims to begin shipping LNG in 2024.

Varello, who is in Tokyo pitching LNG to importers in the country while attending an industry conference, said Japanese buyers were reluctant to sign off-take agreements.

The resistance to signing long-term contracts is coming because electric utilities are getting nuclear reactors back online after prolonged shutdowns following the 2011 Fukushima disaster and the rising use of renewables, Varello said.

The Commonwealth project is one of many that could be approved this year and next, as worldwide consumption of LNG is expected to more than double to 550 million tonnes a year by 2030.

U.S. gas production has soared to new records, bolstered by shale production, increasing the need for export capacity to absorb the supply.

Energy companies are expected to make final decisions on projects that could add more than 60 million tonnes per year of LNG capacity this year, a record.

Qatar Petroleum and Exxon Mobil Corp said earlier this month they will proceed with a $10 billion project that will expand a LNG export plant in Texas.

(Reporting by Jessica Resnick-Ault and Ron Bousso; Additional reporting by Rania El-Gamal, David French and Dmitry Zhdannikov; Editing by Dale Hudson and Christian Schmollinger)

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