By Selina Williams
Spanish utility Iberdrola SA and Houston-based Cheniere Energy
Inc. have reached a nearly $5.6 billion natural-gas deal, as Europe
looks to secure energy supplies and the U.S. pushes efforts to
export gas amid tensions with Russia.
Supply worries have ratcheted up across the European Union as
Russia and the West face off over Ukraine. The Russian state-run
OAO Gazprom provides 30% of Europe's gas, around half of which
flows through Ukraine.
Meanwhile, the boom in hydraulic fracturing, or fracking, has
raised the prospect of the U.S. becoming a major gas exporter in
the next decade. Washington is reviewing some two-dozen projects to
export gas.
It will be a while before large volumes of gas from the U.S.
start to cross the ocean. There is also no guarantee that Europe
can depend on sustained deliveries of gas from the U.S. Over the
past few years, Asian buyers have scrambled to import gas, raising
prices.
So far, only one project--Cheniere's Sabine Pass export terminal
in Louisiana--has received final approval from the U.S. government.
It is expected to begin shipping liquefied natural gas, or LNG, by
early next year. The Obama administration is also studying whether
it should relax decades-old laws restricting oil exports.
Iberdrola's deal for U.S. gas would serve primarily customers in
the U..K., plus some in Spain. The 20-year agreement, which starts
in 2019, is for delivery of about one billion cubic meters of LNG a
year, or enough to supply about 750,000 U.K. homes.
Under the agreement, U.S. natural gas would be liquefied at a
plant in Corpus Christi, Texas, and then shipped to a gas import
facility at the Isle of Grain in the U.K. Cheniere hasn't made a
final investment decision about building the Texas export terminal,
but expects to this year.
Cheniere already has deals to supply U.K. utility Centrica PLC,
oil and gas company BG Group PLC and French oil major Total SA from
its LNG terminal at Sabine Pass. Spanish utility Endesa SA said
last month that it had also secured gas from Cheniere's proposed
Corpus Christi plant.
Amy Harder and Alison Sider contributed to this article.
Write to Selina Williams at selina.williams@wsj.com
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