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Cheniere and Galp sign 20-year LNG supply agreement

EditorEmilio Ghigini
Published 08/05/2024, 08:08 AM
CQP
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HOUSTON - Cheniere Energy, Inc. (NYSE: NYSE:LNG), a major player in the liquefied natural gas (LNG) industry, has entered into a significant long-term agreement with Galp Trading S.A., a subsidiary of the Portuguese energy company Galp Energia, SGPS, S.A.

The sale and purchase agreement (SPA) stipulates that Galp will purchase approximately 0.5 million tonnes of LNG annually from Cheniere Marketing, LLC over a period of 20 years.

The deliveries, which are expected to start in the early 2030s, are contingent upon a positive Final Investment Decision concerning the second train (Train Eight) of the Sabine Pass Liquefaction Expansion Project (SPL Expansion Project).

Additionally, the SPA includes provisions for a limited number of early cargoes to be supplied to Galp prior to the commencement of Train Eight operations.

The SPA's pricing structure is linked to the Henry Hub price index, augmented by a fixed liquefaction fee. This long-term agreement is free-on-board, meaning the buyer assumes responsibility for transportation and insurance once the LNG is loaded onto the shipping vessel.

Jack Fusco, President and CEO of Cheniere, expressed satisfaction with the agreement, highlighting the anticipated importance of U.S. natural gas for Europe's energy portfolio well into the second half of the 21st century. Fusco also noted that the SPA would bolster support for the SPL Expansion Project and signify progress in its development.

The SPL Expansion Project aims to increase LNG capacity by up to approximately 20 million tonnes per annum, including potential debottlenecking opportunities.

Earlier this year, in February 2024, subsidiaries of Cheniere Energy Partners , L.P. (NYSE: NYSE:CQP) sought regulatory approvals to site, construct, and operate the expansion, as well as approvals for LNG exports to countries with and without Free Trade Agreements.

Based in Houston, Texas, Cheniere Energy, Inc. is recognized as a leading LNG producer and exporter in the United States, with a significant presence on the Gulf Coast through its Sabine Pass and Corpus Christi liquefaction facilities. The company is actively engaged in expanding its liquefaction services and exploring other opportunities within the LNG value chain.

This news is based on a press release statement from Cheniere Energy, Inc.

InvestingPro Insights

As Cheniere Energy Partners, L.P. (NYSE: CQP) forges ahead with its SPL Expansion Project, investors and industry observers are closely watching the company's financial health and market performance. According to recent data from InvestingPro, Cheniere Energy Partners boasts a robust market capitalization of $24.65 billion, reflecting significant investor confidence in its business model and growth prospects.

With a Price/Earnings (P/E) ratio of 11.07, the company presents a potentially attractive valuation compared to industry peers. This is further supported by the fact that analysts predict the company will be profitable this year, a sentiment backed by the company's profitable performance over the last twelve months. Additionally, Cheniere Energy Partners' Gross Profit Margin stands at 50.48% for the same period, indicating a strong ability to convert revenue into gross profit.

InvestingPro Tips also highlight that Cheniere Energy Partners has a history of consistent dividend payments, having raised its dividend for 7 consecutive years and maintained payments for 18 consecutive years. This could be particularly appealing to income-focused investors. Moreover, the stock is known to trade with low price volatility, suggesting it might be a suitable option for those looking for stable equity performance.

For investors seeking further insights and analysis on Cheniere Energy Partners, InvestingPro offers additional tips on the company's financials and market performance. Currently, there are 6 more InvestingPro Tips available, which can be explored for a deeper understanding of the company's investment potential.

It's worth noting that, while the company is trading at a high Price/Book multiple of 20.46, indicating a premium market valuation, the InvestingPro Fair Value estimate stands at $55.57, suggesting potential upside from the previous close price of $50.93.

For more detailed analysis and real-time metrics on Cheniere Energy Partners, interested parties can visit https://www.investing.com/pro/CQP.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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