Commonwealth LNG has reached an agreement with EQT, an independent natural gas company, for liquefaction services at its facility in Cameron, Louisiana.

Under the terms of the heads of agreement (HOA), which also includes the associated gas supply, Commonwealth LNG’s facility will produce one million tonnes per annum (mtpa) of liquified natural gas for 15 years. 

Negotiation of a legally binding agreement between the parties will determine the final terms of the LNG supply deal, the companies said.

EQT president and CEO Toby Rice said: “This HOA with Commonwealth represents another step forward in EQT’s risk-adjusted LNG strategy, which seeks to diversify a portion of our production to international markets via arrangements that offer the best combination of upside exposure and downside risk mitigation. 

“Our tolling capacity gives us the flexibility to sell our gas directly to end users globally and we are currently pursuing long-term purchase agreements with prospective international buyers.” 

Located on the Calcasieu River in the Gulf of Mexico, near Cameron, the proposed LNG export facility will have a capacity of 9.3mtpa.

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By GlobalData

Commonwealth LNG aims to make a final investment decision on the project in the first quarter of 2024 and the first cargo deliveries are expected in 2027.

Commonwealth LNG founder and executive chairman Paul Varello said: “We are very pleased to add a US producer of EQT’s stature to Commonwealth’s customer portfolio. This agreement will connect EQT’s vast natural gas assets to Commonwealth’s LNG facility, thus creating a robust value chain from wellhead to water. 

“Accessing EQT’s natural gas production, which achieved a 20% year-over-year reduction in scope 1 and scope 2 greenhouse gas emissions, supports Commonwealth’s goal of achieving best-in-class environmental standards.”

Earlier this month, Commonwealth LNG signed an LNG supply deal with MET Group, a Swiss energy trader. 

The agreement will see Commonwealth LNG supply 1mtpa of LNG to MET Group from its export facility in Louisiana for a duration of 20 years.