Cheniere Energy Inc LNG, through its marketing arm, Cheniere Marketing, entered a sale and purchase agreement (“SPA”) to supply liquefied natural gas to Glencore plc.
Under the SPA, Cheniere will supply 0.8 million tons per annum (Mtpa) of liquefied natural gas on a free-on-board basis to Glencore. The deal has a term of 13 years and will be in effect from October 2023.
The agreement is likely to bring Cheniere's Corpus Christi Stage 3 project closer to a final investment decision, which is expected to occur in 2022. The Stage 3 expansion will involve the development of up to seven midscale trains, with an aggregate nominal production capacity of 10 Mtpa.
Cheniere expects to increase the total capacity of the Corpus Christi Liquefaction facility to 25 Mtpa. Notably, the growing overseas demand is favorable for the company to lock in funding for additional capacity.
The Glencore agreement is Cheniere’s second liquefied natural gas supply deal in recent weeks as the fuel is currently trading at record prices amid shortages in Asia and Europe, which have urged buyers to secure supplies.
Europe and Asia are struggling to secure liquefied natural gas supplies, intending to restock ahead of the colder months and meet the unquenchable demand for the fuel in Asia. Recent power cuts in China due to coal shortages have only intensified competition between Asia and Europe in securing energy sources.
Earlier this month, Cheniere entered a similar agreement with ENN Natural Gas Co. Ltd to deliver liquefied natural gas in China. Cheniere will supply 0.9 Mtpa of liquefied natural gas on a free-on-board basis to ENN. The deal has a term of 13 years and will be effective from July 2022.
The latest SPA highlights the strength of the global liquefied natural gas market and Cheniere’s role as a leading global liquefied natural gas supplier.
Headquartered in Houston, TX, Cheniere primarily engages in businesses related to liquefied natural gas.
Zacks Rank & Other Stocks to Consider
The company currently carries a Zack Rank #1 (Strong Buy).
Some other top-ranked players in the energy space are Suncor Energy Inc. SU, ConocoPhillips COP and Range Resources Corporation RRC, each currently sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Suncor’s earnings for 2021 are expected to increase 38.4% year over year.
ConocoPhillips’ earnings for 2021 are expected to rise 30.4% year over year.
Range Resources’ earnings for 2021 are expected to surge 73.7% year over year.
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