--Cheniere confirms will start exports in 2015
--Company would be first to export LNG from lower 48 states
--Other would-be exporters still waiting for government
permits
By Ben Lefebvre
Cheniere Energy Inc. (LNG) reiterated Friday it will be ready to
begin producing liquefied natural gas at its terminal in Sabine
Pass, La., in late 2015, a step that will lead to the first exports
of natural gas extracted in the contiguous U.S.
The announcement underscores how Cheniere, the only company to
possess the necessary government permits to export natural gas to
countries not in free-trade agreements with the U.S., is on
schedule with its first two processing units while government
regulators pore over about two dozen permit applications from
competing projects.
Cheniere said construction was about 20% complete on the first
two Sabine Pass LNG processing units, known as trains.
Estimated completion dates for the two trains are running
according to Cheniere's advanced schedule, with the first expected
to begin LNG production in late 2015, the company said. Cheniere in
October 2011 signed a 20-year contract to sell 4.2 million tonnes
of LNG a year from Train 1 to a subsidiary of BG Group Plc.
(BG)
Cheniere was among a handful of companies that built LNG import
terminals in the last decade, as the U.S. was expected to become a
major natural gas importer due to declining production. But
hydraulic fracturing helped energy producers unlock natural gas
from shale formations, leading to an unexpected supply glut that
has crashed prices and opened up the possibility of exports.
Cheniere moved before others to turn its idle Sabine Pass LNG
import terminal, sitting in a deep water shipping channel less than
four miles from the Gulf of Mexico, into an export facility.
Overall, Cheniere has signed contracts to sell 16 million tonnes
a year from four process units at Sabine Pass to customers
including Gas Natural Fenosa, Korea Gas Corp. (036460.SE) and GAIL
(India) Ltd. (532155.BY). Cheniere has also agreed to sell 2
million tonnes a year to Total SA (TOT) at a proposed fifth
processing unit at Sabine Pass.
U.S. natural gas prices have fallen 76% since June 2008, making
them among the lowest in the world and attractive to buyers in Asia
and Europe. Exxon Mobil Corp. (XOM), Freeport LNG and other
would-be LNG exporters are still waiting for government approval to
ship natural gas to countries not in a free-trade agreement with
the U.S., a group that includes lucrative markets such as
Japan.
But as the company makes headway in constructing its terminal,
rising costs caused Cheniere and its Cheniere Energy Partners LP
(CQP) unit to post wider fourth-quarter losses Friday. Cheniere
Energy reported a loss of $94.3 million, compared with a loss of
$57.8 million a year earlier. Revenue dropped 7.1% to $67.4
million.
The per-share loss narrowed to 44 cents from 66 cents, due to
more shares outstanding in the most recent quarter. Excluding items
such as terminal and pipeline development expenses and early debt
extinguishment, the adjusted loss was 19 cents a share this
year.
Analysts polled by Thomson Reuters had most recently forecast a
loss of 26 cents a share.
Cheniere Energy Partners reported a loss of $63.5 million,
compared with a loss of $7.46 million a year ago. Excluding items
such as expenses for the liquefaction project and early debt
extinguishment, the adjusted loss was $18.4 million.
The company swung to a per-share loss of six cents from a
per-share profit of 30 cents last year, reflecting more shares
outstanding in the most-recent quarter.
Revenue declined 5% to $67.3 million and operating margin fell
to 29.1% from 52.3%.
Cheniere Energy shares recently were up 4.1% at $21.04. Cheniere
Energy Partners shares were flat at $22.48.
--Melodie Warner contributed to this article.
Write to Ben Lefebvre at ben.lefebvre@dowjones.com
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