Dominion Energy (ticker: D) issued a statement today saying it would begin commercial operations early next year under the terms of previously negotiated 20-year contracts with ST Cove Point, which is the joint venture of Sumitomo Corporation and Tokyo Gas, and for GGULL, the U.S. affiliate of GAIL (India) LTD.
Responding to a report from India’s Oil Minister, reported by Reuters, Dominion said that “the characterization of contract renegotiations is false. Conversations are ongoing with export customers in preparation for beginning commercial operations but there have been no changes in the contract terms since initial contract execution, and Dominion Energy does not intend to renegotiate contract terms in the future.”
Construction of the liquefaction facility began in October 2014. With a cost of $4 billion, it is the largest construction project ever thus far for Maryland and for Dominion Energy, involving 10,000 craft workers.
Cove Point will be the second U.S. LNG export plant to go into commercial operations if it starts shipping commercial cargoes in 2018. Cheniere Energy (ticker: LNG) was the first in February 2016, when it began commercial shipments from its Sabine Pass export facility in Louisiana.
From Reuters
NEW DELHI – Indian gas firm GAIL (India) Ltd is renegotiating its liquefied natural gas purchase deals with U.S.-based Cheniere Energy and Dominion Cove Point, Oil Minister Dharmendra Pradhan told lawmakers on Monday.
GAIL has signed contracts for sourcing up to 5.8 million tonnes of LNG from the United States.
“GAIL has held number of discussions with Cheniere Energy (Sabine Terminal) and Dominion Cove Point LNG LP (DCP Terminal), for re-negotiation of the contracts,” Pradhan said, adding the latest discussions took place in November.
India wants to raise the share of natural gas in its energy mix to 15 percent in the next few years from about 6.5 percent now. But price-sensitive customers in the South Asian nation forced renegotiation of the price of two long-term LNG deals.
Pricing of U.S. LNG is linked to a formula but other charges including freight to India add an extra $2-$3 per million British thermal units, leading to GAIL scouting for destination, time and volume swap deals.
India has in the past renegotiated LNG deals with Qatar’s RasGas and Exxon Mobil Corp as spot prices have declined substantially amid a supply glut.
Reuters in June reported that GAIL is looking to renegotiate LNG deals with Cheniere and Dominion Cove.
