Cheniere Energy Inc. (NYSE MKT: LNG) and Korea Gas Corporation (KOGAS) yesterday hailed the commencement of their 20-year Sales and Purchase Agreement (SPA) to supply U.S.-sourced LNG to KOGAS from the Sabine Pass Liquefaction facility in Louisiana. The SPA, which was originally signed in January of 2012, officially commenced on June 1, 2017, with the first cargo loading the following day.
Under the terms of the SPA, Cheniere shall sell and make available for delivery to KOGAS approximately 3.5 million tonnes of LNG per year, which represents more than 10 percent of South Korea's total annual demand.
Cheniere officials, led by CEO and President Jack Fusco, hosted KOGAS officials, led by CEO Seung-Hoon Lee, yesterday at Cheniere's Sabine Pass Liquefaction facility.
"KOGAS is an ideal commercial partner as one of the largest buyers of LNG in the world and serves South Korea, an important economic and national ally of the United States," said Jack Fusco, President and CEO of Cheniere. "This is just the beginning of a long and productive relationship that will be beneficial to both companies and both countries, and we hope to continue to grow this relationship between KOGAS and Cheniere."
KOGAS president & CEO Mr. Seung-Hoon Lee said, "This long-term LNG SPA with Cheniere Energy will contribute significantly to improving the trade balance between the United States and Korea. Plus, the destination-free US LNG will greatly increase the flexibility and efficiency in the global LNG market."
KOGAS was incorporated by the Korean government in 1983 to engage in the development, production and distribution of liquefied natural gas. KOGAS has since grown to become one of the largest buyers of LNG and is the Republic of Korea's dominant gas provider. KOGAS operates four LNG terminals with the current storage capacity of 4.84 million tons in 69 storage tanks and a nationwide pipeline network that spans over 4,672 km. KOGAS imports LNG from around the world and supplies it to power generation plants, gas-utility companies and city gas companies throughout the country. It produces and supplies natural gas, purifies and sells gas-related by-products, builds and operates production facilities and distribution networks, and explores for, imports and exports natural gas for domestic and overseas markets.
In February 2016, Cheniere became the first company to ship LNG from the contiguous United States in over 50 years, and is currently the only exporter of U.S. LNG. Cheniere's unique business model provides a full-service LNG offering to customers worldwide, which includes acquiring, transporting, and processing pipeline gas, and providing LNG to customers either at the flange of the LNG terminal, or on a delivered basis to markets around the world.