Barclays Capital has signed an agreement with Eni SpA to supply and market liquefied-natural-gas cargoes at a Louisiana terminal in an expansion of the bank’s LNG services.
Eni has “significant capacity and storage rights” at the Cameron terminal in Hackberry, Louisiana, according to a release from the bank. Under the multiyear agreement, Barclays will market natural gas supplied from imports for downstream delivery.
The Cameron terminal can convert LNG to natural gas and send out 1.5 billion cubic feet a day of natural gas to regional pipelines, according to Sempra Energy, owner of the terminal. Eni signed a 20-year contract with Sempra in 2005 to contract 40 percent of the capacity. The site can store 480,000 cubic meters of LNG.
Barclays will also have the right to supply LNG to Eni at Cameron, the release said.
“This transaction demonstrates how Barclays Capital’s active participation in the physical gas and LNG markets can generate material value for our clients,” said Henry Weitzner, managing director and head of U.S. natural gas and power trading for Barclays Capital.
Barclays initiated its LNG services with a deal in December, to market Excelerate Energy LLC’s liquefied-natural-gas cargoes landing at the Northeast Gateway Deepwater Port, 13 miles off the Massachusetts shore.
The agreement provided Excelerate, the U.S. LNG trader half-owned by RWE AG, with fixed-price hedging mechanisms and services including taking physical delivery, transport and optimization of cargoes through profit-sharing between the companies, according to Barclays.
“Banks are adding flexibility to their trading portfolios,” said Zach Allen, president of Pan Eurasian Enterprises Inc., a Raleigh, North Carolina-based tracker of LNG shipments. “They must be counting on the LNG market being oversupplied and they can pick up a cargo at a low price.”
Global LNG production capacity is set to grow by more than 50 percent from 2009 to 2013, with 60 billion cubic meters of liquefaction production volume available at the end of last year, the International Energy Agency said in its Medium-Term Oil & Gas Markets 2010 report in June. Output rose 5 percent last year, the agency said.
JPMorgan Chase & Co. reached a deal with Cheniere Energy Inc. in March to use Cheniere’s Sabine Pass LNG terminal in Louisiana.
U.S. LNG imports will average 1.37 billion cubic feet a day this year, up 10 percent from a year ago, the Energy Department said in its monthly Short-Term Energy Outlook report on July 7.