Cheniere Energy Partners
BG Group, a British energy company, agreed to pay Cheniere $8.2 billion over 20 years. BG plans to buy cheap American natural gas from Cheniere and sell it to customers in European and Asian markets, where the going price for natural gas is much higher.
Cheniere's export facility will cost about $6 billion and should be ready to export LNG by 2015. The location currently functions as an import terminal and -- not surprisingly, given the boom in domestic gas production -- is underused.
The global natural gas picture is much prettier than the domestic one. The price of natural gas in U.S. markets is hovering around $4.00 right now, compared with $14.00 to $15.00 in Asia. Demand there is expected to soar nearly 70% over the next 10 years.
The significance of this deal should not be underestimated. Consider that the LNG export joint venture project between Apache
Royal Dutch Shell
Hit the road, Gas
The tide has certainly turned. Only a few years ago, companies were clamoring for permits to build LNG import facilities, and operations began just last week at what's expected to be the last U.S. import facility.
Cheniere hasn't made a profit in 13 years, and while this deal is a bet on the future, it has the potential to establish the company as a prime-time player in U.S. LNG export. Considering that the U.S. has more natural gas than it knows what to do with right now, it may end up being a very safe bet and the company's ticket to profitability.
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