Blackstone To Invest $2 Billion For Sabine Pass Liquefaction Project

April 2012, Vol. 239 No. 4

Cheniere Energy Partners, L.P. has entered into an exclusive arrangement with Blackstone Energy Partners L.P., Blackstone Capital Partners VI L.P., and certain affiliates in which Blackstone would provide financing worth $2 billion to fund the equity portion of the costs of developing, constructing and placing into service its Sabine Pass liquefaction project being developed at the Sabine Pass LNG terminal, the purchase of the Creole Trail pipeline from Cheniere Energy, Inc. and other partnership business purposes.

Cheniere Partners is moving toward a final investment decision for development and construction of the first two of four liquefaction trains. The cost for the construction of the first two trains is estimated to be $4.5-5 billion before financing costs. The debt financing for the Liquefaction Project is expected to be completed shortly with construction starting in the first half of 2012. The purchase of the Creole Trail pipeline is expected to close concurrently with the closing of the financing.

Cheniere Partners owns 100% of the Sabine Pass LNG receiving terminal located on the Sabine Pass Channel in western Cameron Parish, LA. The Sabine Pass terminal has regasification and send-out capacity of 4 Bcf/d and storage capacity of 16.9 Bcfe). Cheniere Partners is developing a project to add liquefaction and export capabilities to the existing infrastructure at the Sabine Pass LNG terminal. The Liquefaction Project is being designed and permitted for up to four modular LNG trains, each with a nominal capacity of 4.5 mtpa. The Liquefaction Project is expected to be constructed with each LNG train commencing operations six to nine months after the previous train.

In November, Sabine Liquefaction entered into a lump sum turnkey contract for the engineering, procurement and construction of the first two trains of the project with Bechtel Oil, Gas and Chemicals, Inc. Sabine Liquefaction has also entered into four long-term customer sale and purchase agreements (“SPAs”) for 16 mtpa of LNG volumes, which represents 89% of the nominal LNG volumes. The customers include BG Gulf Coast LNG, LLC (“BG”) for 5.5 mtpa, Gas Natural Fenosa for 3.5 mtpa, KOGAS for 3.5 mtpa and GAIL (India) Ltd. for 3.5 mtpa.