Woodside's double dose of good news

WOODSIDE Petroleum announced this morning that the conditions precedent to its LNG sales and purchase agreement with Corpus Christi Liquefaction had been satisfied, giving the Australian major a strong base to leverage new volumes from Browse, Kitimat and other sources of supply.
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Woodside's announcement comes just two days after the US Energy Department gave final approval for Cheniere to export LNG from its Corpus Christi plant near Texas.

The US departmental approval on Tuesday allows the plant to export 2.1 billion cubic feet of natural gas per day for 20 years, which Cheniere hopes will kick off in 2018.

CCL, Cheniere's subsidiary, made a final investment decision on the construction of Trains 1 and 2 of the project on May 13.

Woodside CEO Peter Coleman welcomed the addition of this extra volume 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", Coleman said.

Under the agreement, Woodside will purchase roughly 0.85 million tonnes of LNG a year from the Corpus Christi project on start-up of the second train at the LNG export facility being developed near Corpus Christi, Texas.

The project is planned to include up to three LNG trains with a combined production capacity of 13.5MMtpa.

LNG will be bought on a free on board basis. Woodside will pay 115% of the monthly Henry Hub price plus $US3.50 per million British thermal unit, in line with contracts signed with the other buyers from the Corpus Christi LNG project.

The 20-year 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 $3.50/MMBtu for cancelled quantities.

Cargoes to Woodside from Train 2 are expected to start in Q4, 2019.

Including its LNG export facility at Sabine Pass, the Houston-headquartered Cheniere has six trains under construction, with first LNG expected at Sabine Pass from Train 1 by year end.

Total project costs of about $US11.5 billion for the first two trains, two LNG storage tanks, one dock and the natural gas supply pipeline will be funded with roughly $3.1 billion of project equity and about $8.4 billion of debt.

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