U.S. natural gas company Cheniere Energy has entered into a long-term liquefied natural gas (LNG) sale and purchase agreement with Norwegian energy firm Equinor.
Under the deal, Equinor has agreed to purchase approximately 1.75 million tons per annum (mtpa) of LNG from Cheniere’s subsidiary Cheniere Marketing on a free-on-board basis.
Delivery of half of the volume will commence in 2027, with full-volume deliveries expected to reach at the end of the decade. The term of the agreement is 15 years from the commencement of delivery of the full 1.75 mtpa of LNG volumes.
LNG could play huge role as the Bridge of the Energy Transition. Read more
This agreement increases Equinor’s total contracted volumes with Cheniere to around 3.5 million tons per year. By adding more U.S. LNG to its portfolio, Equinor says it aims to strengthen its position as a global natural gas supplier while continuing to be a major provider of natural gas to Europe.
“Europe will need natural gas to ensure flexible energy on demand to support the build-out of more intermittent renewables and LNG will play an important role,” said Helge Haugane, Equinor’s senior vice president for Gas & Power. “In other markets, for example in Asia, demand for LNG is expected to grow as a solution to energy security as well as lower emissions.”
Overall, the U.S. natural gas production and subsequent liquefied natural gas exports will continue to grow significantly over the coming decades, according to a recent long-term outlook by the U.S. Energy Information Administration.
The EIA’s report projects that domestic natural gas production could increase 15 percent to 42.1 trillion cubic feet (TCF) per year by 2050. The real driver of this sustained growth is not U.S. gas-fired power or heating demand, but a sharp growth curve in LNG exports as other countries are striving to decarbonize and decouple from coal-fired power, but still need energy-density fuel security.
