Cheniere Energy’s LNG Construction Cost Estimate Jumps 39%

Cheniere Energy Inc. (LNG), the liquefied natural-gas importer that Standard & Poor’s said is on the verge of default, boosted its cost estimate for a proposed U.S. gas- export terminal by 39 percent.

The first phase of Cheniere’s planned Louisiana plant will cost $4.5 billion to $5 billion for 9 million tons of annual processing capacity, the Houston-based company said today in a statement. That equates to $555 per ton of capacity, compared with Cheniere’s $400-per-ton estimate in an Aug. 5 public filing.

Chief Executive Officer Charif Souki said in an Oct. 31 interview that the company won’t miss a $298 million debt payment due in May because it will refinance its debt in the meantime. Souki said at the time that he was counting on a 20- year agreement signed last month with U.K.-based BG Group Plc (BG/) for 3.5 million tons of annual deliveries to help attract financing for the project.

Cheniere said its Cheniere Energy Partners LP (CQP) subsidiary hired Bechtel Group Inc. of San Francisco to design and build the export plant, according to today’s statement. The agreement is contingent on Cheniere obtaining financing, federal permits and customers to commit to buying at least another 3.5 million tons of annual shipments.

Cheniere rose 7.4 percent to $11.34 at the close in New York. The shares have more than doubled this year.

Super-Chilled Gas

Cheniere’s cash and near-cash equivalents fell 19 percent to $131.3 million in the three months that ended on Sept. 30, according to data compiled by Bloomberg.

“Assuming its current liquidity does not materially improve, Cheniere will not be able to make its 2012 maturity payments,” S&P analyst Mark Habib wrote in an Oct. 31 report.

Gas can be super-chilled to reduce it to liquid form so it can be stowed on tankers for shipment to markets inaccessible by pipelines.

New drilling techniques have created a glut of North American gas that has depressed prices and triggered interest in exporting the fuel to more lucrative European and Asian markets. Royal Dutch Shell Plc (RDSA) and Apache Corp. (APA) are among the energy companies exploring the possibility of shipping North American gas overseas.

Cheniere, which has lost money for 13 consecutive years, already operates a gas-import terminal in southwest Louisiana. Such terminals have languished as the surfeit of domestic gas squelched demand for foreign LNG.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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