Woodside Petroleum has finalized terms relating to its purchase of gas from the Texas-based Corpus Christi liquefaction project.
The company told the Australian market it had satisfied the conditions precedent to the LNG sales and purchase agreement with Cheniere Energy subsidiary, Corpus Christi Liquefaction.
The firming of terms for natural gas supply comes after a positive final investment decision on the construction of trains 1 and 2 of the Corpus Christi project was made earlier this week.
Under the 20-year agreement, Woodside will purchase about 85,000 tonnes of LNG per annum from Corpus Christi on start up of the second train at the LNG export facility. Cargoes to Woodside are expected to start in 2019.
LNG will be purchased on a free on board basis.
The price payable by Woodside will be 115 per cent of the monthly Henry Hub price plus US$3.50 per million British thermal units (MMBtu), in line with contracts signed with the other buyers from the Corpus Christi LNG project.
The agreement includes an extension option of up to an additional 10 years and a mechanism that gives Woodside the option to forgo deliveries with sufficient notice through the payment of US$3.50/MMBtu for cancelled quantities.
Woodside CEO Peter Coleman welcomed the addition of the new volumes to Woodside's LNG portfolio.
“These volumes complement Woodside’s existing portfolio and provide a very strong base for Woodside to leverage new volumes from Browse, Kitimat and other sources of supply,” he said.
The Corpus Christi project, located on the Coastal Bend of Texas along the Gulf of Mexico, is expected to come online in 2018 when the first train begins operations.
Project capital costs for the first two trains, two LNG storage tanks, one dock and the natural gas supply pipeline is about US$11.5 billion.
The project is planned to include up to three LNG trains with a combined production capacity of 13.5 million tonnes a year.
Shares in Woodside were trading 0.1% lower at $34.67.
Lauren Barrett can be reached at lbarrett@hartenergy.com
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