Cheniere Energy Delivers First US LNG Cargo To Lithuania

U.S.-based natural gas exporter, Cheniere Energy, Inc. (NYSE:LNG) delivered Lithuania its first liquefied natural gas cargo (‘’LNG’’) from the United States as part of a deal with the country’s state-owned gas trader, Lietuvos Duju Tiekimas in Jun 2017.

Lithuania Aims to Reduce Reliance on Russian Gas

The former Soviet state, presently a member of both NATO and the European Union, struck the deal with Cheniere Energy to reduce its dependence on Russian energy giant Gazprom (MCX:GAZP) and thereby diversify its gas suppliers. Although the U.S. Embassy in Lithuania stated that the government was not involved in the deal, Lithuania believes the deal will help strengthen relations between the two countries.

In 2014, Russia's annexation of Crimea alarmed the former Soviet states. Lithuania anticipates that reducing dependency on Russia for energy will decrease the tension in the region. It became the second country in the region to have received U.S. liquefied natural gas cargo from Cheniere Energy after Poland. Lithuania has been importing liquefied natural gas from Norway’s Statoil (OL:STL) ASA (NYSE:STO) to add more supply options in the country. Lithuania expects to import half of its gas consumption as liquefied natural gas in 2017.

Cheniere Energy: Expanding its Export Footprint

The gas exported by Cheniere Energy will cater to clients in Lithuania, Latvia and Estonia. The cost of shipment from the company's export terminal on the U.S. Gulf Coast to Klaipeda terminal in the Baltic state is low enough to compete with the gas delivered through Russian pipelines. The supply of gas is expected to increase in the coming years.

Cheniere Energy – the only LNG exporter of the U.S. – has sent out more than 160 cargoes of liquefied natural gas since Feb 2017, the majority of which is on long-term contracts, to Latin America and Asia.

The company is taking firm and calculated steps in Europe keeping in mind the new sanctions by the U.S. government, targeting Russia. Cheniere Energy is benefiting from the shale revolution in the United States for energy exports. It is helping the company to enter new markets in Europe and compete with regional majors like Gazprom.

Due to low gas price in the domestic market caused by abundant supply, the company is banking on exporting gas to foreign markets with comparatively higher price and demand. The company expects to benefit from its first-mover advantage in the liquefied natural gas export market, which will reflect in its revenues and earnings.

About the Company and Zacks Rank

Houston, TX-based Cheniere Energy is primarily engaged in businesses related to LNG through its two business segments: LNG terminal and LNG and natural gas marketing. The company, through its controlling interest in Cheniere Energy Partners L.P. (NYSE:CQP) and partial ownership interest in Cheniere Energy Partners L.P. Holdings LLC (NYSE:CQH) , owns and operates the Sabine Pass LNG terminal in Louisiana, North America’s first large-scale liquefied gas export facility.

Cheniere Energy has been witnessing consistent improvement in revenues for the past few years. Over the last three years (2014–2016), the company’s revenues recorded CAGR of 118.8%. Cheniere Energy looks well positioned to maintain its revenue growth trajectory in the coming years on the back of solid operations and long-term contracts. However, its high debt obligations make it a risky investment going forward.

The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price Performance

Cheniere Energy has lost 1.5% of its value year to date compared with 32.7% fall of its industry.

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