BP Signs 20-Year Export Contract with Freeport LNG
BP Plc, Europe’s second-biggest energy company, signed a deal to export U.S. gas from the Freeport terminal in Texas, joining Royal Dutch Shell Plc, Exxon Mobil Corp. and Total SA in the race to ship burgeoning North American production overseas.
BP’s 20-year contract is for 4.4 million tons a year, the same size as earlier agreements with Osaka Gas Co. and Chubu Electric Power Co. of Japan to start supplies from 2017 from the plant’s first unit, Freeport said in a statement. The liquefaction tolling agreement with BP will commence upon completion of Freeport LNG’s second production unit, or train.
The glut of natural gas that has caused the lowest U.S. prices in a decade is prompting companies to seek permission to ship fuel overseas. Freeport, Texas is one of more than 20 proposed LNG export terminals in the U.S. seeking permits allowing processing of about 31 billion cubic feet a day, according to the U.S. Department of Energy.
“With the first two liquefaction trains of the project fully contracted, we intend to approach the financing markets imminently so that we can begin construction on the initial two- train facility as soon as we receive Federal Energy Regulatory Commission approval,” said Michael S. Smith, chief executive officer of Freeport LNG.
Royal Dutch Shell, Europe’s largest oil company, and Kinder Morgan Inc. last month said they intend to form a company to export LNG from a site near Savannah, Georgia. That site already has permission from the Energy Department to ship gas to countries that have free-trade agreements with the U.S.
Total has a deal at Cheniere Energy Inc.’s Sabine Pass terminal. Exxon is backing the Golden Pass terminal in Texas.
– Brian Swint, Copyright 2013 Bloomberg.
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