Cheniere Energy's subsidiary, Cheniere Marketing, has signed a 20-year LNG sale and purchase agreement (SPA) with Galp Trading, a subsidiary of Portuguese oil and gas company Galp Energia.
Under the long-term contract, Galp will purchase approximately 500,000tpa of LNG on a free-on-board basis.
The price of the LNG will be indexed to the Henry Hub and include a fixed liquefaction fee.
Deliveries under the agreement are due to commence in the early 2030s, contingent upon a positive final investment decision (FID) regarding the second train (Train Eight) of the Sabine Pass Liquefaction (SPL) Expansion Project.
The SPA also provides for a limited number of early cargoes to be procured by Galp ahead of Train Eight's operational start.
The Sabine Pass Liquefaction Expansion Project, currently under development, aims to add up to around 20mtpa of LNG capacity, which includes potential debottlenecking opportunities.
Cheniere Energy Partners' subsidiaries have already initiated the regulatory process, submitting applications in February 2024 for the construction and operation of the expansion project and for LNG export authorisation to both free trade agreement (FTA) and non-FTA countries.
Cheniere president and CEO Jack Fusco said: “We are pleased to enter into this long-term agreement with Galp, a leader across Iberia’s energy sector, which reinforces the critical role US natural gas is expected to play in Europe’s energy mix into the second half of this century.
“We look forward to providing our flexible, reliable and cleaner burning LNG to Galp under this new long-term agreement. This SPA is expected to provide further support for the SPL Expansion Project, and demonstrates continued momentum as we progress development of the project.”
This agreement follows Cheniere's other agreements for long-term LNG supply.
These include a November 2023 deal with China's Foran for roughly 900,000tpa over 20 years, and an August 2023 agreement with Germany's BASF for around 800,000tpa.
LNG for both Foran and BASF will be sourced at the Sabine Pass Liquefaction Expansion Project.
