British energy giant
) has inked an agreement to ship liquefied natural gas (LNG)
processed at a terminal in Freeport, Texas. The agreement is for
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Per the deal, BP will export 4.4 million tons per annum (mtpa).
The deliveries are expected to commence in 2017, from the plant's
first unit. The liquefaction tolling agreement with BP will begin
upon the completion of Freeport LNG's second production unit or
In July 2012, Freeport disclosed its commitment with two Japanese
companies, Osaka Gas and Chubu Electric Power, for 4.4 mtpa of
LNG per year from its first train. The agreements will be
operational upon the completion of construction of the units.
The construction at Freeport is subject to various approvals from
the US authorities, including the consent from the Federal Energy
Regulatory Commission (FERC). It also awaits clearance from the
US Department of Energy (DOE) to export LNG to non-free trade
agreement countries. A final investment decision is expected by
the end of 2013.
Freeport has already successfully completely booked the first two
liquefaction trains and therefore expects to get the construction
permission to bring its project online as scheduled by 2017.
Several facilities are awaiting federal consent for natural gas
exports. Till date, only one export facility from Cheniere Energy
in Louisiana has been cleared by regulators.
BP's commitment to export LNG overseas, in the current scenario
holds immense potential. In the long race, wherein several
companies are trying to participate in this new venture, BP's
early entry is noteworthy. This will help the company to
strengthen its relationship with the leading national
Natural gas oversupply has resulted in rock bottom prices in the
last decade and has compelled companies such as
Royal Dutch Shell plc
), to ship North American production overseas.
BP holds a Zacks Rank #3, which is equivalent to a short-term