ARC Resources and Cheniere Collaborate on Natural Gas Supply Agreement

ARC Resources, based in Calgary, has taken a significant step in advancing its strategic presence in the natural gas market through its subsidiary, ARC Resources US Corp. The company has recently entered into a substantial long-term natural gas supply agreement with Sabine Pass Liquefaction Stage V LLC, a subsidiary under the umbrella of Cheniere Energy Inc.

This marks the second long-term collaboration between ARC Resources and Cheniere, signifying a continued effort to advance the commercialization of the SPL Expansion Project. The agreement is poised to enhance Cheniere's capacity to deliver increased quantities of Canadian natural gas to European markets, positioning both companies strategically in the evolving global energy landscape.

As part of the agreement, ARC Resources is committed to supplying 140,000 MMbtu/d of natural gas for an extensive term of 15 years. This commitment comes into effect with the commencement of commercial operations for the first train (Train 7) of the Sabine Pass Stage 5 Expansion Project (SPL Expansion Project).

ARC Resources is well-prepared to fulfill its commitment under this agreement, leveraging its existing contracted pipeline capacity to the US Gulf Coast to ensure the seamless supply of natural gas volumes to Cheniere. This approach underscores ARC Resources' strategic planning and operational efficiency in meeting its obligations and contributing to the success of the SPL Expansion Project.

Under the terms of the agreement, ARC Resources will receive an LNG price determined by the Dutch Title Transfer Facility (TTF) price, with fixed deductions for liquefaction, shipping, and regasification fees. This pricing structure reflects a comprehensive understanding of the market dynamics and ensures a fair and transparent arrangement for both parties involved.

It is essential to note that the agreement's execution is contingent on various factors, including a positive final investment decision on Train 7. This cautious approach ensures that the agreement aligns with the project's overall progress and financial viability. Once finalized, the LNG associated with this gas supply—approximately 0.85 million tonnes per year—will be marketed by Cheniere Marketing International LLP, showcasing the collaborative nature of the partnership.

ARC Resources' involvement with Cheniere extends beyond this recent agreement. The company already has an existing commitment to supply 140,000 MMbtu/d to Cheniere's Corpus Christi Stage III expansion. Additionally, a non-binding memorandum of understanding is in place for ARC Resources to supply and liquefy 200 MMcfd of natural gas for Cedar LNG on Canada's West Coast.

The first agreement between ARC Resources and Cheniere, announced in 2022, provided exposure to LNG pricing based on the Platts Japan Korea Marker. With the addition of the supply agreement for Cheniere's SPL Expansion Project, ARC Resources is set to supply approximately 20% of its current natural gas production to global markets, incorporating overseas pricing dynamics as specified in the contracts.