Chesapeake Energy Corp. continues to move closer to getting premium international pricing for its Haynesville Shale gas.
Oklahoma City-based Chesapeake entered into a long-term LNG supply heads of agreement (HOA) with global commodities trader Vitol Inc., the company announced alongside third-quarter earnings after markets closed on Oct. 31.
Under the agreement, Chesapeake will supply up to 1 million tonnes per annum of LNG to Vitol for a period of 15 years. Purchase prices will be indexed to the international Japan Korea Marker (JKM).
“We are pleased to expand our relationship with Vitol to deliver independently certified reliable, affordable, lower carbon energy to global markets in need,” said Chesapeake President and CEO Nick Dell'Osso in a press release. “Today's announcement marks another important step on our path to 'Be LNG Ready,' and is further recognition of the premium rock, returns and runway of our advantaged portfolio and the strength of our financial position.”
Chesapeake and Vitol will jointly select “the most optimal liquefaction facility” in the U.S. to liquefy the gas produced by Chesapeake.
The HOA is targeted to begin in 2028.
“The global energy landscape has changed significantly in the last two years, which has highlighted the importance of U.S. natural gas production and liquefaction in satisfying the world's energy needs,” said Ben Marshall, head of Vitol Americas. “Global LNG demand is experiencing tremendous growth and Vitol continues to strengthen its position to safely and reliably deliver cost effective, flexible solutions to our customers around the world.”
Earlier this year, Chesapeake entered into a long-term LNG supply agreement with commodities trader Gunvor Singapore Pte Ltd. The agreement with Gunvor is slated to begin in 2027.
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