Chevron Corp (CVX.N) on Wednesday signaled its move into the booming U.S. liquefied natural gas (LNG) export market with two agreements designed to increase sales of its shale gas to global markets.
Top U.S. gas producers have been striking deals with LNG developers to tap skyhigh global prices with demand forecast to double by 2040. The United States is expected to become the largest LNG exporter this year, leapfrogging Australia and Qatar.
In deals disclosed on Wednesday, Chevron agreed to buy 2 million tonnes per annum (mtpa) of LNG each from units of Cheniere Energy Inc (LNG.A) and Venture Global LNG. The deal with Cheniere would include first deliveries in 2026 and continue through 2042.
The agreement with Venture Global LNG will split purchases from the company’s existing Plaquemines LNG plant and from a future plant called Calcasieu Pass 2, both in Louisiana on the U.S. Gulf Coast.
The deals, which give Chevron a supply of LNG to sell overseas, are part of Chief Executive Michael Wirth’s plan to expand into a red-hot market.
Sanctions imposed on Russia in response to its invasion of Ukraine have exacerbated a global natural gas shortage, boosting demand for U.S. LNG exports.
LNG demand is expected to almost double to 700 million tonnes by 2040, according to Shell . Earlier this week U.S. oil major Exxon Mobil Corp. (XOM.N) said it was part of a group of companies investing in a near $30 billion project to develop the world’s largest LNG project in Qatar.
Cheniere said the agreement would accelerate its plans to expand its Gulf Coast facilities. It formally approved on Wednesday an about $8 billion expansion of is Corpus Christi, Texas, facility. Executives have said it could further expand that plant or its Sabine Pass, Texas operation.