US LNG export player Cheniere Energy and South Korea’s utility Kogas announced the start of their 20-year sales and purchase deal to supply US LNG to the latter from the Sabine Pass liquefaction facility in Louisiana.
The agreement, which was originally signed in January of 2012, officially started on June 1, with the first cargo loading the following day, Cheniere said in a statement on Sunday.
As previously reported by Reuters, the 174,000-cbm SM Eagle LNG carrier loaded a cargo on June 2 and is heading for Kogas’ Tongyeong terminal. The vessel is expected to dock at the terminal on July 2.
Under the terms of the deal between Cheniere and Kogas, the US company will sell and make available for delivery to Kogas about 3.5 million tonnes of LNG per year, which represents more than 10 percent of South Korea’s total annual demand.
Cheniere officials, led by Chief Executive Jack Fusco , hosted Kogas officials, led by CEO Seung-Hoon Lee , on Sunday at the Sabine Pass facility.
“Kogas is an ideal commercial partner as one of the largest buyers of LNG in the world and serves South Korea, an important economic and national ally of the United States,” said Fusco.
Seung-Hoon Lee said that this long-term deal with Cheniere would “contribute significantly to improving the trade balance between the United States and Korea.”
“Plus, the destination-free US LNG will greatly increase the flexibility and efficiency in the global LNG market,” he added.
Kogas operates four LNG terminals with the current storage capacity of 4.84 million tons in 69 storage tanks and a nationwide pipeline network that spans over 4,672 km.
The utility imports LNG from around the world and supplies it to power generation plants, gas-utility companies and city gas companies throughout the country.