Asian customers set to receive first LNG supplies from Cheniere Energy

American energy company Cheniere Energy is taking advantage of the increase in gas prices in Asia, with the company gearing up to send its first supplies of liquefied natural gas (LNG) from its Sabine Pass export terminal on the US Gulf Coast to Asian customers, according to a company official.

The plans signal how the US shale gas revolution is sending ripples across the globe and suggest regional markets, once disparate on pricing, are starting to align. Asian spot LNG prices for the supercooled fuel, while low compared to 2014, were last quoted at US$7.30 per million British thermal units, up from as low as US$4 in April.

Even as mega-projects in Australia ramp up production, the higher prices mean it has become commercially viable to send shipments from the US Gulf Coast through the enlarged Panama Canal and across the Pacific. Shipping big LNG cargoes to Asia became possible after the expansion of the Panama Canal in June.

Due to the recent rise in Asian LNG prices to above US$7, Cheniere can now start delivering supplies to north Asia, said the official in an interview, requesting anonymity because supply details have not been finalized.

The cargoes will be delivered in the next one or two months, with China or South Korea the most likely destinations in North Asia, the official said.

Using the Panama Canal decreases distances between the Gulf of Mexico and Asia to about 14,500 kilometers (9,000 miles) from 25,600, allowing US producers to better compete in one of the world’s biggest gas consuming markets.

The first LNG gas vessel from the lower 48 US states headed from Sabine Pass for China in July, collected by Shell as part of its contracted offtake from the terminal.

The planned shipments disclosed by the official will be the first to Asia from Cheniere’s own gas supplies. The company owns and operates the terminal and has committed most of its output to other companies, such as Royal Dutch Shell.

Cheniere has more spare gas for its own sales after starting operations at the second LNG production plant at Sabine Pass, known as a ‘train’ in the industry, in September. Six trains will eventually be operating and freezing gas from US shale fields to a liquid form for transport on ships.