Cheniere Energy Partners’ subsidiary, Sabine Pass Liquefaction, has entered into a liquefied natural gas sale and purchase agreement (SPA) with GAIL (India) Limited. As per this agreement, GAIL has agreed to purchase approximately 3.5 million tns per annum (mtpa) of LNG from train four. Prior to the commencement of train four operations, GAIL will purchase bridge volumes of approximately 0.2 mtpa upon the commencement of operations of train two. Sabine Liquefaction is currently developing a liquefaction project at the Sabine Pass LNG terminal that will include up to four liquefaction trains capable of producing up to 18mtpa of LNG. The company goal is to sell approximately 14 mtpa of the capacity under long-term SPAs. The project is being developed in phases. Sabine Liquefaction recently announced that it has reached its targeted annual contract quantity of 7 mtpa for the first phase and is heading towards making a final investment decision for the development and construction of two liquefaction trains. The SPA with GAIL represents the first contract for the second phase of the project, which will also include two liquefaction trains with combined production capacity of 9 mtpa. Under the SPA, GAIL will purchase LNG on an FOB basis for a purchase price indexed to the monthly Henry Hub price plus a fixed component. LNG will be loaded onto GAIL’s vessels. The 20 year SPA begins upon the date of first commercial delivery with an extension option of up to 10 years. Delivery of the bridge volumes will begin with the commencement of operations of train two, which is expected in 2016. Deliveries from train four are to occur upon commencement of its operations, which is expected in 2017. The SPA is subject to certain conditions precedent, including Sabine Liquefaction receiving regulatory approvals, securing necessary financing arrangements and making a final investment decision to construct the second phase of the liquefaction project.
