In reporting its third quarter financial results this week, Chesapeake Energy also announced a major LNG supply agreement in which the product will be shipped to Japan.
The company’s subsidiary, Chesapeake Energy marketing LLC reached what is called a Heads of Agreement with Vitol Inc., an agreement to supply up to 1 million tons of LNG a year. The purchase price will be indexed to Japan Korean Marker for a period of 15 years.
Chesapeake explained that following the execution of the HOA, it and Vitol will jointly choose the most optimal liquefaction facility in the United States to liquify the gas produced by Chesapeake for delivery to Vitol. The HOA has a targeted start date in 2028.
Vitol Inc. is an international energy distributor and recently announced it strengthened its position in Asia’s expanding biofuel market with the delivery of specialised bunker barges to Singapore in 2024.
Nick Dell’Osso, Chesapeake President and Chief Executive Officer, said the deal with Vitol is an expansion of Chesapeake’s effort to deliver to global markets.
“Today’s announcement marks another important step on our path to ‘Be LNG Ready’, and is further recognition of the premium rock, returns, and runway of our advantaged portfolio and the strength of our financial position. We look forward to entering into additional agreements as export capacity continues to come online.”
Ben Marshall, Head of Vitol Americas, said the agreement highlights the importance of U.S. natural gas production and liquefaction in satisfing the world’s energy needs.
“Global LNG demand is experiencing tremendous growth and Vitol continues to strengthen its position to safely and reliably deliver cost effective, flexible solutions to our customers around the world.”