Petrobras Said to Buy Cheniere's First U.S. Shale Gas Export

  • Shipment to Brazilian energy company agreed to Monday
  • Brazilian LNG imports help meet demand as drought hits

Petroleo Brasileiro SA, Brazil’s state-owned energy company, is scheduled to receive the first cargo of shale gas to be shipped from the U.S., according to a person familiar with the deal.

The shipment of liquefied natural gas was agreed to Monday, said the person, who asked not to be identified because the information isn’t public. Cheniere Energy Inc.began loading the first tanker at its Sabine Pass terminal in Louisiana, U.S. Coast Guard spokesman Dustin Williams said in an e-mail Tuesday.

“The biggest buyer of LNG outside of the winter is Brazil first and Argentina second in the Atlantic Basin," said Ted Michael, an analyst for energy data provider Genscape Inc.“They buy LNG for gas-powered, air-conditioned power."

Cheniere rose 1.5 percent to $30.77 at 3:24 p.m. in New York after earlier gaining as much as 6.5 percent.

America’s first LNG export will hit the water just as global supplies begin to swell, weighing on prices. Other gas-export projects are expected to come under pressure to secure financing and long-term contracts amid the global commodity rout and shifts in demand overseas, Daniel Yergin, vice chairman of the energy consulting group IHS Inc., said in an interview Feb. 17.

Demand is forecast to be higher in South America during the spring, in part due to a drought that has increased Brazil’s dependence on the power-plant fuel. Brazil has increased LNG imports in the past few years after an agreement to buy gas via a pipeline from Bolivia reached its limits. Petrobras bought about 80 LNG cargoes last year. It’s expected to purchase another 50 in 2016, according to Porto Alegre-based Gas Energy consultancy.

Petrobras had no immediate comment on the shipment. Cheniere didn’t respond to an e-mail and voicemail. Initial exports will be considered commissioning cargoes as part of the start-up process to ensure the terminal is fully operational. Once that’s complete, Cheniere will need approval from the Federal Energy Regulatory Commission to operate the export terminal commercially.

Loading the Asia Vision, the LNG tanker that moored at the Sabine Pass on Feb. 21, may take a few days and the timing of its departure is unclear, Williams said. Genscape Inc., which has cameras pointed at the terminal, said the vessel began unloading ballast water shortly after it arrived and has continued to do so, which is “consistent with taking on more weight from LNG loading onto the ship,” analyst Jason Lord said in an e-mail Tuesday. He estimated it may take closer to 36 hours to load the Asia Vision.

Spot Cargo

This is the first so-called spot cargo from the facility, which is still in the commissioning, or start-up, phase. BG Group, a unit of London-based Royal Dutch Shell Plc, will get the first contracted cargo and has agreed to pay about $723 million a year for production capacity once more units come online, Cheniere said in a regulatory filing Feb. 19.

Cheniere’s first cargoes will be launched into a much tougher global gas market. Two years ago, U.S. gas was going for a discount of almost $20 per million Btu versus Japan or Europe and now the difference is just a few dollars. Sabine Pass export volume may average 460 million cubic feet a day this summer as spot and the forward curve signal “there is little demand” for U.S.-based LNG, a Bloomberg New Energy Finance report said Tuesday.

“It’s symbolically significant," Marco Tavares, head of Gas Energy, said by phone from Rio de Janeiro, where Petrobras is based. “For Petrobras, it’s just another import deal, but from now on the U.S. will be a relevant shale gas exporter."

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