China, Singapore invest in U.S. LNG for future power

China and Singapore have invested a combined US$1 billion in a US liquefied natural gas facility.

Their investment in Louisiana-based Cheniere Energy, Inc. will access cheaper energy, which last week was priced at some US$3/mmBtu compared to Asian prices of US$13/mmBtu. The much lower price is because the LNG is produced by “fracking” or hydraulic fracturing, a controversial technology that has its adherents and critics.

The Chinese and Singaporean investments were made via the countries' respective sovereign wealth funds: China Investment Corporation and The Government of Singapore Investment Corporation. The size of the investment each gives them an 11% share in the project.

LNG prices could fall further if Cheniere finds investors for the proposed US$5.6 billion expansion of its LNG facility at Sabine Pass in Louisiana. When completed in 2015, Sabine Pass will be the first LNG export facility to open within the United States in close to half a century. The facility will be capable of producing 8 million tons of LNG per year.

Despite the US abundance in natural gas resources, only Cheniere has obtained permission from the Department of Energy to LNG. All other US applications are currently on hold until the Department of Energy completes a study on the economic consequences of exporting LNG.