Glitch Delays Cheniere's Natural-Gas Exports

Cheniere Energy Partners LP said on Thursday that it faced an unexpected delay in its plan to be the first company to export natural gas from the lower 48 states.

The natural gas shipment had been expected to depart from the Houston-based company's Sabine Pass plant in southwest Louisiana later this month.

Cheniere said the shipment had been postponed until late February or March, citing "instrumentation issues" uncovered during the final phases of the commissioning of the first of its five so-called trains, or refrigeration units.

The instrumentation issues involved problems with wiring that prevented Cheniere from obtaining accurate readings on the internal temperature of refrigeration equipment, said one person familiar with the matter.

Sabine Pass is one of two liquefied-natural-gas facilities Cheniere is building to export super-chilled natural gas by ship. It is the first of dozens of planned projects in the U.S. and Canada designed to tap into cheap supplies of North American shale gas.

The delay comes as global prices for LNG have plummeted because of weaker demand from Asia, which makes up 70% of the market.

The setback for Cheniere raises questions about whether Sabine Pass will be dogged by construction delays and cost overruns that have affected other LNG facilities in Australia, another emerging natural gas export hub.

Cheniere had been negotiating to sell its first cargo to Petró leo Brasileiro SA, Brazil's state-run oil company, according to people familiar with the talks. But those discussions were scuttled because of the instrumentation issues, and the company will have to strike a new deal when it is ready to start shipments, one of the people said.

Cheniere has long-term supply contracts that are scheduled to kick-in later this year, and the company said it still expected to meet those obligations for delivery. Cheniere's board replaced the company's â <chief executiveÂ and founder of its operating unit last month over strategic differences.

Bechtel Corp. has finished construction of the first of five refrigeration units at Sabine Pass and Cheniere said the others are being built on an accelerated schedule. Bechtel is also building two additional trains at Cheniere's Corpus Christi, Texas, plant.

Cheniere has contracted nearly all the processing capacity of its first train at Sabine Pass to U.K.-based oil and gas firm BG Group PLC, which is in the process of being taken over by Royal Dutch Shell PLC.

Write to Chester Dawson at chester.dawson@wsj.com and Christian Berthelsen at christian.berthelsen@wsj.com

(END) Dow Jones Newswires

January 14, 2016 17:05 ET (22:05 GMT)

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