Cheniere net earnings plunge on derivative values, LNG expansions on track

Cheniere Energy Inc. reported net income of $502 million for the 3 months ended Mar. 31, 2024, compared with $5.43 billion for the corresponding 2023 period. The lower earnings were due primarily to a roughly $5-billion year-on-year reduction in the value of Cheniere’s derivative instruments.

Cheniere reported a $4.7-billion gain in derivative value in first-quarter 2023 and $300-million loss for the first 3 months of 2024. The company uses derivative instruments indexed to international gas and LNG prices in an effort to provide stable margins on purchases of natural gas and sales of LNG over the life of its long-term agreements. 

In terms of its operations, Cheniere reaffirmed that first LNG from its 10-million tonne/year (tpy) Corpus Christ LNG Stage 3 (CCL3) expansion would come online by end 2024 and that substantial would occur by second-half 2026.

CCL3 will use seven midscale trains. Work was 55.9% complete at the end of first-quarter 2024: engineering, 89.3% complete; procurement, 74.8%; subcontract work, 75.4%; and construction, 16.5%. This compares with 51.4% overall completion at the end of 2024. 

Cheniere is also developing a 20-million tpy expansion of its Sabine Pass LNG plant. In February 2024 the company submitted an application with the US Federal Energy Regulatory Commission for authorization to site, build, and operate the Sabine Pass expansion. It also applied with the Department of Energy for permission to export to both free-trade agreement (FTA) and non-FTA counties, despite the current pause on permits for the latter. The project has 6.5 million tpy of capacity remaining available for long-term contract.

As of last year, the company was planning to begin work on the Sabine Pass expansion by late 2025, targeting a full in-service date of 2031. It expects to begin commercial operations of the expansion’s first train by 2029 (OGJ Online, Nov. 29, 2023).