Commodities
Venture Global shares jump on report QatarEnergy is in talks to buy at least 3 million tons of LNG a year, a day after its Cheniere deal
Qatar, which lost about 17% of its export capacity to Iranian strikes in March, is lining up long-term US supply as it signs Henry Hub-linked contracts running to 2054.
HedgeWeekly News Desk ·
Venture Global shares rose 6.3% in Friday trading after Reuters reported, citing three people familiar with the negotiations, that QatarEnergy is in advanced talks to buy at least 3 million metric tons a year of liquefied natural gas from the US exporter under a long-term contract. Neither company has confirmed the talks, and no duration, pricing or start date has been reported.
The report followed a signed deal on Thursday. QatarEnergy agreed two contracts with Cheniere Energy for up to 4 million tonnes a year, split evenly between Cheniere's Sabine Pass and Corpus Christi terminals, with deliveries from 2031 through 2054. The cargoes are priced against the Henry Hub gas benchmark plus a fixed fee and loaded free-on-board, and 1 million tonnes a year of the Sabine Pass volume depends on a final investment decision for the first phase of that site's expansion.
Qatar is buying because it lost supply. Iranian missile strikes on Ras Laffan in March damaged two LNG trains with combined capacity of 12.8 million tonnes a year, about 17% of the country's export capacity, and QatarEnergy has warned repairs could take three to five years. In September Reuters reported the company was seeking multi-year US contracts through 2031 and named Venture Global, Cheniere and Woodside as counterparties; Rapidan Energy data cited then showed Venture Global had 10 million tonnes a year of uncontracted capacity in projects under construction, the largest block among the US developers listed.
Why it matters: a signed contract of 3 million tons a year would exceed the just over 2 million tons of new and expanded deals Venture Global added in the second quarter, and would give long-term buyers to a company still spending more cash than it generates while it builds its CP2 project. The stock traded at 7.9 times forward earnings at Thursday's close, below its one-year average of 9.0 times. More broadly, one of the world's largest LNG exporters signing Henry Hub-linked purchases out to 2054 shows Gulf disruption pushing buyers toward US Gulf Coast supply that does not pass through the Strait of Hormuz. The next markers are any confirmation of the Qatar talks and Venture Global's third-quarter results, due next month.