Cheniere Energy Unit Clinches LNG Deal With OMV Trading Arm

Cheniere Marketing International LLP — a wholly-owned subsidiary of Cheniere Energy, Inc. (NYSE:LNG) — has signed a multi-year sales agreement with the trading arm of Austria’s OMV Group. Headquartered in Vienna, OMV is engaged in the production and marketing of oil and natural gas. Per the deal, Cheniere Energy will deliver LNG cargoes from the Sabine Pass LNG terminal to Europe; however the details regarding the pricing and duration remain undisclosed.

Due to low gas price in the domestic market caused by abundant supply, Cheniere Energy is banking on exporting gas to foreign markets with comparatively higher price and demand. Per the Energy Department, LNG production capacity of the United States will increase four times by the end of 2019, helping the nation to catch the likes of Qatar and Australia. Being the only LNG exporter of U.S. — the company expected to ship around 200 LNG vessels by the end of this year, with majority of its long-term contracts to Latin America and Asia.

The company is taking firm steps in Europe keeping in mind the new sanctions by the U.S. government targeting Russia. With European Union importing natural gas from Russia, European leaders are concerned about its increasing political and economic dependence on the country. Natural gas exports from United States aims at reducing its reliance on Russian natural gas. Cheniere Energy is benefiting from the shale revolution in the United States for energy exports. It is helping the company to penetrate new markets in Europe which has started witnessing a robust demand over the last few years.

In August 2015, Cheniere clinched a similar deal with France’s EDF (PA:EDF). This year Cheniere Energy has also signed a five-year LNG export deal with Poland's state-owned Polish Oil & Gas ("PGNiG"). The company also delivered Lithuania its first liquefied natural gas cargo from the United States as part of a deal with the country’s state-owned gas trader, Lietuvos Duju Tiekimas in June 2017. The gas exported by Cheniere Energy will cater to clients in Lithuania, Latvia and Estonia.

Cheniere Energy with its first-mover advantage in the liquefied natural gas export market looks well positioned to garner solid revenues in the coming years on the back of robust operations and long-term contracts. The company, through its controlling interest in Cheniere Energy Partners L.P. (NYSE:CQP) and partial ownership interest in Cheniere Energy Partners L.P. Holdings LLC (NYSE:CQH) , owns and operates the Sabine Pass LNG terminal in Louisiana, North America’s first large-scale liquefied gas export facility. Cheniere Energy currently carries a Zacks Rank #3 (Hold).