Cheniere Considers 50% Expansion of LNG Plant at Sabine Pass

Cheniere Energy Inc. (LNG), the first company to win approval to export gas from the continental U.S., is considering a 50 percent expansion of capacity at its Sabine Pass terminal in Louisiana as LNG demand rises.

“When we marketed the project at Sabine Pass, clearly we had more demand than we could satisfy,” Nicolas Zanen, the vice president of trading at Cheniere, said in an interview in Singapore today. “It makes sense to look at expanding to a fifth and a sixth” train for liquefying gas, he said. No timeline for enlarging the facility has been set, he said.

GAIL India Ltd. (GAIL) and BG Group Plc (BG/) are among customers that have agreed to buy liquefied natural gas from Sabine Pass. The plant may increase export capacity to 27 million metric tons from a designed 18 million ton, and first shipments are expected in late-2015. Cheniere has also begun offering fuel for its Corpus Christi, Texas, LNG project, Zanen said.

Korea Gas Corp. (036460), the world’s biggest LNG-buying company, agreed in January to buy LNG from Sabine Pass based on prices at the Henry Hub, the delivery point for New York futures. The contract may help the utility buy the fuel for 30 percent cheaper than supplies from Asia, which are traditionally indexed to oil, the state-owned South Korean company said in April.

Natural gas for November delivery fell 8.5 cents to settle yesterday at $3.45 per million British thermal units on the New York Mercantile Exchange. The futures are down 4.3 percent from a year ago.

“Customers come to us and say they want to buy LNG from the U.S., they want to buy based on Henry Hub,” Zanen said. “We have a good idea of what the demand is like. The U.S. gas price is very cheap, and they want to benefit from that. They want to diversify as well.”

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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