Commonwealth LNG, in partnership with Gunvor, has launched a bid process for offtake from its planned 8.4 mtpa LNG facility in Cameron, Louisiana.
It is the first-ever tender process in which prospective LNG customers can secure future term supply at volumes, pricing and duration of their choosing through competitive bidding, the company informed in a statement. This different approach follows changes in the energy market resulting from the global pandemic.
LNG will be made available under tolling, free on board (FOB) or delivered at place (DAP) offtake agreements to match customer preferences.
Paul Varello , Commonwealth founder and CEO stated: “We believe this process offers a mutually advantageous, low-risk solution for buyers to address their long-term needs while allowing Commonwealth to advance our project expeditiously to meet market demand”.
The tender is supported by Gunvor Group, the leading independent global trader of LNG. Gunvor supports Commonwealth in securing binding LNG offtake and gas supply agreements for the facility. This is covered by Gunvor’s and Commonwealth’s strategic agreement.
Gunvor has committed to take up to 3 million tons per annum of LNG offtake from the project. Gunvor will also enable the offering of DAP basis to customers desiring this option.
Kalpesh Patel , Gunvor co-head of LNG trading said: “The tender process further builds on the momentum generated between Commonwealth and Gunvor under the Strategic Agreement executed in 2019. The flexibility Gunvor can offer both in terms of early bridging volumes and firm DES/DAP contracts differentiates Commonwealth from other developing LNG projects”.
Commonwealth keeps Poten & Partners managing the tender process, which was launched 18 January. It calls for confirmations of interest by mid-February and submission of bids by early April 2021.
Commonwealth will evaluate each bid based on the bidder’s requested volume, price, contract tenor and credit. Contracts are due to be awarded by June 2021.
Commonwealth is implementing an accelerated construction schedule that will allow the project to be built in three years using a predominantly modular approach with major components being fabricated offsite. This will enable the project to offer one of the most competitive LNG sales prices from the United States.