Aug 5 (Reuters) - Cheniere Energy said on Monday

it has agreed to supply 0.5 million tonnes per annum of

liquefied natural gas to a subsidiary of Galp Energia

for 20 years.

Deliveries are expected to begin in the early 2030s, but are

dependent on the approval for an additional liquefaction unit

(Train Eight) for Cheniere's Sabine Pass Liquefaction Expansion

Project.

As part of the deal, Galp will also buy some LNG cargoes

from Cheniere before train eight starts.

CONTEXT

Sabine Pass currently operates six liquefaction trains, each

with a production capacity of approximately 5 mtpa of LNG. An

expansion project is underway to add up to 20 mtpa of additional

capacity.

In February, Sabine Pass filed an application with the

Federal Energy Regulatory Commission (FERC) for authorization to

site, construct and operate the Sabine Pass Stage 5 Expansion

Project.

Last year, Cheniere Energy said it would supply 0.8 million

tonnes per annum (mtpa) of liquefied natural gas (LNG) to

Germany's BASF, starting mid-2026.

WHY IT IS IMPORTANT

In 2023, the United States emerged as the global leader

in liquefied natural gas (LNG) exports, surpassing previous

frontrunners Australia and Qatar. This shift was driven by

increased global demand and higher prices, partly due to supply

disruptions and sanctions related to the Russia-Ukraine

conflict.

During an earnings call in May, Cheniere's vice

president noted that they anticipated rising LNG demand in Asia

as prices decreased, while high storage levels in Europe

resulted in a 13% drop in demand on the continent.

KEY QUOTES

"This SPA is expected to provide further support for the SPL

Expansion Project, and demonstrates continued momentum as we

progress development of the project," said Cheniere CEO Jack

Fusco.