Cheniere and Shell deliver carbon-neutral U.S. LNG to Europe

U.S. liquefied natural gas company Cheniere Energy Inc said Tuesday it supplied a carbon neutral cargo to Royal Dutch Shell as part of a long-term agreement, joining a list of sellers neutralizing emissions as more buyers commit to environmental targets.

"I think offering climate solutions to our customers is going to be a bigger and bigger portion of our business," Cheniere Chief Executive Jack Fusco said during the company's first quarter earnings call.

The carbon-neutral LNG cargo was supplied from Cheniere's Sabine Pass facility in Louisiana and delivered to Europe in early April, with offsets bought from Shell's global portfolio of nature-based projects.

Consumers are increasingly paying a premium to have emissions neutralized from wellhead through consumption. In March, Russian energy giant Gazprom PAO said it had delivered its first carbon-neutral shipment to Europe. Pavilion signed a long-term contract with Chevron Corp earlier this year and one with Qatar Petroleum late last year requesting data on greenhouse gas emissions. Last year, China National Offshore Oil Corp, or CNOOC, bought from Shell its first cargoes with offset carbon emissions.

Cheniere on Tuesday boosted its annual guidance after posting a 40% increase in first-quarter earnings from a year ago, with EBITDA rising to $1.5 billion. The company increased its annual guidance by 4.5%, with expected earnings now ranging from $4.3 billion to $4.6 billion.

"Continued strength in global LNG market fundamentals, together with the strong first quarter results we reported today, improves our outlook for the balance of the year and enables us to increase our full-year 2021 financial guidance," Fusco said.

Improved market margins also allowed for stronger distributable cash flow guidance, now expected between $1.6 billion and $1.9 billion this year, the company said.

Cheniere's revenue rose to $3.09 billion in the first quarter from $2.71 billion a year earlier, with the company selling bigger volumes for better prices.

Cheniere exported a record of 133 cargoes of LNG in the quarter, despite having part of its facilities down a few days during the winter storm in February.

Spot prices for June delivery in Asia are above $9 per million British thermal units (mmBtu), from around $2 a year ago.

"The structural tightening that we've been predicting for some time is now underway," Chief Commercial Officer Anatol Feygin said in the same call.

Net income rose by $18 million during the quarter to $1.54 per share, compared with $1.43 per share in the first three months of 2020.

Cheniere operates three LNG processing units, known as trains, at its Corpus Christi terminal, including the third train which achieved substantial completion on March 26, with a total annual LNG production capacity of about 15 million tonnes.

Its sixth train at the Sabine is almost one year ahead of schedule and could start production before year end, Fusco said. (Reporting by Sabrina Valle; Editing by Edmund Blair, Bernadette Baum, Alexandra Hudson)

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