Cheniere (LNG) to Supply Liquefied Natural Gas to Sinochem

·2-min read

Cheniere Energy, Inc. LNG, through its wholly-owned subsidiary, Cheniere Marketing, entered an agreement to supply liquefied natural gas to Sinochem Group Co. Ltd.

Per the terms of the agreement, Cheniere will supply an initial volume of 0.9 million tons per annum (mtpa) on a free-on-board basis to China-based Sinochem. The quantity will eventually increase to 1.8 mtpa. The deal has a term of 17.5 years and will be in effect from July 2023.

The deal is Cheniere’s third liquefied natural gas supply agreement in recent months, as the fuel is currently trading at record prices amid shortages in Asia and Europe, which have urged buyers to secure supplies. The agreement shows Cheniere’s ability to find solutions to meet consumers’ liquefied natural gas needs globally, acknowledged by the extent of the company’s platform and the reliability of its operations.

The agreement further supports investment in additional liquefied natural gas capacity, including Cheniere's Corpus Christi Stage 3 project. The deal will likely bring the Corpus Christi Stage 3 project closer to a final investment decision, which is expected to occur in 2022. The Stage 3 expansion will involve the development of up to seven midscale trains, with an aggregate nominal production capacity of 10 Mtpa.

The agreement highlights the strength of the global liquefied natural gas market and Cheniere’s role as a leading global liquefied natural gas supplier. The company cited that the long-term contract with Sinochem will enhance its role in providing clean and reliable energy to the China market for several years.

Then again, purchasing liquefied natural gas is an important initiative for Sinochem to ensure a steady energy supply, seek transformation and improve the energy industry.

Company Profile

Headquartered in Houston, TX, Cheniere primarily engages in businesses related to liquefied natural gas.

Zacks Rank & Stocks to Consider

The company currently carries a Zack Rank #3 (Hold).

Some better-ranked players in the energy space are Callon Petroleum Company CPE, APA Corporation APA and EOG Resources EOG, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Callon’s earnings for 2021 are expected to increase 56.6% year over year.

APA’s earnings for 2021 are expected to rise 25.1% year over year.

EOG Resources’ earnings for 2021 are expected to increase 18.6% year over year.

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