Houston-based Commonwealth LNG has reportedly received commitments from European buyers to take almost half of the liquefied natural gas (LNG) from its planned 8.4-million-tonnes-per-year export terminal in Louisiana.
Citing Commonwealth LNG CEO Paul Varello, Reuters said on Wednesday that the prospective buyers were European end-users with their own importing terminals. Varello expects to sign heads of agreements shortly.
The Commonwealth project is one of more than 10 LNG export terminals under development or construction in the United States along the coast of the Gulf of Mexico.
Varello said the project is exchanging documents with counterparties that will represent three to four million tonnes of capacity.
Due to the fact that prospective buyers overcommit to projects, Varella stated that the company needed to get closer to the full 8 million tonnes in heads of agreements to get 6 million tonnes in final agreements.
Varello said the company would process natural gas into LNG at the terminal “well below” $2.50 per million British thermal units for buyers signing 20-year supply contracts.
Commonwealth LNG expects to make a final investment decision by the third or fourth quarter of next year after getting final environmental approvals and aims to begin shipping LNG in 2024.
The Commonwealth project is one of many that could be approved this year and next, as worldwide consumption of LNG is expected to more than double to 550 million tonnes a year by 2030.
Japanese customers reluctant to buy
The Commonwealth LNG CEO is currently in Tokyo pitching LNG to importers in the country while attending an industry conference.
Varello said that the buyers in Japan were reluctant to sign LNG off-take agreements at the moment.
The resistance to signing long-term contracts is coming because electric utilities are getting nuclear reactors back online after prolonged shutdowns following the 2011 Fukushima disaster and the rising use of renewables.