Cheniere Energy Inc. expects the global natural gas market to accommodate the coming influx of LNG volumes expected to hit the water by the end of the decade as it continues to make progress on three of its own projects.
“We acknowledge that the global capacity under construction today plus what may reach [final investment decision] in the near-term could generate a larger supply increase than seen in previous cycles,” Chief Commercial Officer Anatol Feygin said Friday during the company’s first quarter earnings call. “But we also believe that the underlying market should accommodate the growth efficiently without resorting to curtailments on the supply side.”
Cheniere, the largest U.S. liquefied natural gas producer, operates the world’s second largest liquefaction platform with 45 million metric tons/year (mmty) of capacity. It’s working to develop another 33 mmty of projects at its Sabine Pass and Corpus Christi export plants on the Gulf Coast. Other projects on the Gulf Coast, along with those across the world, particularly in Qatar, are expected to significantly boost global gas supplies during roughly the same period.
Higher volumes, Feygin said, are likely to lower prices and prove “constructive for the market” by stoking additional demand.
“We believe new supply will help moderate spot prices and volatility to a relatively more affordable and less volatile level on a sustained basis, helping LNG reinforce its credentials as an affordable, secure and sustainable component of baseload energy supply, particularly for the high-growth nations of Asia, which are currently heavily dependent on coal to support their economic growth and energy security,” Feygin said.
He added that additional import infrastructure being built across the world and rising imports in cost-sensitive markets like Thailand and India should also help sustain demand.
Cheniere’s Corpus Christi Stage 3 expansion project, which would add seven trains and 10 mmty of capacity to the existing 15 mmty facility in South Texas, was nearly 60% complete at end of the first quarter. Management said the project remains on track to produce first LNG by the end of this year. CEO Jack Fusco said the company is targeting the end of 2026 to have all seven trains online.
Plans for another two trains at Corpus Christi have been impacted by the U.S. pause on LNG export authorizations to non-free trade agreement (NFTA) countries. Cheniere’s application to send LNG from the proposed eighth and ninth trains at Corpus to NFTA countries is still pending at the U.S. Department of Energy (DOE).
New NFTA application authorizations have been suspended while DOE staff reviews policies to determine whether more domestic exports are in the public interest. Fusco said Friday the company still expects to receive all necessary regulatory approvals and sanction trains 8 and 9 next year, when DOE officials have also said the pause on NFTA authorizations is likely to end.
Meanwhile, another expansion to add 20 mmty of capacity at the existing 30 mmty Sabine Pass facility in Louisiana is moving through the regulatory process. Cheniere formally filed during the first quarter to build and operate the expansion at the Federal Energy Regulatory Commission. It also filed with the DOE to export to NFTA countries.
More recently, Fusco said the deep freeze that hit Texas in January created upstream challenges that changed the composition of the company's feed gas. The issue impacted LNG production during the first quarter, but Fusco said the company was still able to meet all of its customer obligations.
Cheniere loaded 601 TBtu of LNG, or 166 cargoes, during the first quarter, roughly flat with the 602 TBtu, or 167 cargoes, it loaded in the year-ago period.
Fusco added that maintenance at the company’s export plants would be spread more “strategically” across the calendar. Cheniere has already completed what Fusco described as smaller-scale and more efficient maintenance projects.
“Those will continue throughout the year, especially as we continue into the summer months, but we do not anticipate a long outage like we executed in June last year,” he said.
Cheniere reported first quarter net income of $502 million ($2.13/share), compared to net income of $5.4 billion ($22.10) in 1Q2023. The year-over-year earnings decline was mainly driven by a change in the value of the company’s derivatives. Cheniere pays some North American producers for feed gas supply at prices tied to international indexes, which declined in the first quarter.
