OREANDA-NEWS. The first cargo to be loaded from the 25mn t/yr Sabine Pass facility on the US Gulf coast could be delayed until next year, operator US firm Cheniere Energy chief executive Charif Souki said at a conference in Paris, France, today.

Cheniere had aimed to load the first cargo from Sabine Pass by the end of this year — the first LNG to be loaded from a US liquefaction facility. But delays to the commissioning of the first train could push back the loading window. The cargo will be the first to be loaded from a US liquefaction facility.

Cheniere can deliver cargoes from the US Gulf coast to Europe for $4.50/mn Btu, Souki said. With the shipping cost between the US Gulf coast and the UK at about 41?/mn Btu on a spot basis, this implies a fob price of more than $4/mn Btu. But Cheniere is expected to offer to deliver cargoes it markets from Sabine Pass. Its shipping costs may be lower than the spot level as it may deliver cargoes with vessels under fixed-rate five-year charter.

At this level, Cheniere would be able to offer cargoes to European buyers at more competitive prices than those companies that have deals to buy LNG from Sabine Pass, if the fixed liquefaction fee in these deals reduces the competitiveness of volumes sold by other companies from Sabine Pass. But these sellers may opt to discount the fixed liquefaction fee when marketing volumes on a spot basis.

The UK's BG has a 20-year contract for up to 3.5mn t/yr of LNG from train 1 at Sabine Pass. Under the deal, BG will pay a liquefaction fee of $2.25/mn Btu, plus 115pc of the Henry Hub price for the month of loading if it opts to receive cargoes. Based on current Henry Hub prices for March 2016, this would work out as a fob price of $5.48/mn Btu.

This suggests BG could deliver cargoes from Sabine Pass to the UK at a profit once train 1 starts commercial operations. The NBP first-quarter price was at $6.44/mn Btu yesterday. Regasification and other costs are typically covered for deliveries to UK terminals at about 95pc of the hub price — $6.12/mn Btu in this case. BG has regasification capacity at the 4mn t/yr Dragon facility in south Wales and has previously delivered cargoes to the terminal during periods of weak global spot demand.

Of all the companies that have entered into agreements with Cheniere for Sabine Pass volumes, BG has the lowest fixed liquefaction fee for its cargoes from train 1. Other buyers will pay $2.49-3/mn Btu.

BG's LNG from Sabine Pass would form part of Shell's portfolio once the company's bid to buy the UK firm is completed. BG is likely to start receiving volumes from Sabine Pass once the train commences commercial operations, scheduled for March 2016.

Train 1 — like all five proposed trains at Sabine Pass — would have peak-load capacity of 5mn t/yr and base-load capacity of 4.5mn t/yr. Trains 2-4 have been scheduled to start commercial operations in June 2016, April 2017 and August 2017, respectively.

Cheniere made a final investment decision on train 5 in July and said that the project could start operations as early as 2018.

The peak capacity of US projects under construction stands at more than 70mn t/yr. Together with new Australian projects, the combined capacity of US projects is expected to challenge the market share of the world's biggest LNG producing complex, Ras Laffan in Qatar, which has a liquefaction capacity of 77mn t/yr.