(Bloomberg Businessweek) -- Naureen Malik: What sets Cheniere apart from other companies that liquefy natural gas?Jack Fusco: The beauty of the Cheniere model vs. just about any other LNG facility under construction today in the U.S. is that we are a full-service model. So if you are a utility and not a big conglomerate and you really don’t want to worry about procuring gas in America and shipping it to your facility, you come to Cheniere and we’ll deliver. If you want it delivered by ship to your [regasification] terminal in Asia, we are happy to do that. If you want it f.o.b. Louisiana, we are happy to do that.
What will drive LNG demand growth next year?What I see with Asia, whether it’s India, China, or Taiwan, or South Korea, or Vietnam, is we could easily double the size of the company. It could be a phenomenal shift. In China alone, it’s more than 45 percent year over year in LNG demand growth, and no one anticipated that level of growth.
Is that kind of growth in China sustainable?The part that’s extremely exciting to me is it’s a secular shift. It’s not just because of a tsunami or that it’s cold. In China today there are 16 regas terminals in operation. There are four under construction and at least a dozen more in the planning stages. They want to shift from coal-fired generation in the main metropolitan areas to natural gas combined-cycle power plants. They’re building 40-year assets, and they need 40 years’ worth of reliable LNG. They could go from 30 million tons this year to 100 million tons by 2025 if they’re successful with their electrification plans.
What about other Asian nations?When we talk to our customers in Taiwan, they’re looking at retiring older nuclear plants and utilizing combined-cycle natural gas plants instead of coal plants. When we talk to our customers in South Korea, it’s the same thing. They want to retire their coal plants and burn more natural gas. Those are secular shifts.
Is all the action in Asia?It’s global. We had large central offices. So a year and a half ago, we had Houston, London, Singapore. Now we have Houston, London, Singapore, Japan, Beijing, and Santiago. We’re establishing offices that are closer to our customers with smaller numbers of Cheniere employees so we can be present in those markets and not spend a lot of time flying around the world.
How does geopolitics affect your business?I try not to think about it at all, to be real honest with you. All the transactions with the U.S. LNG counterparties, including Cheniere, are between willing buyers and willing sellers.
Does it help or hurt when the White House talks about using LNG to shift trade imbalances?For Cheniere, having the president or the president’s administration talk about our project and be willing to help us engage with different counterparties around the world is absolutely positive for our business. We are part of the solution for the trade imbalances. Our financials and our revenues are all from counterparties that are offshore.
Is your next buyer going to be from China?We are talking to everybody right now. We have a dozen executives traveling around the world. I can’t tell you who the next contract is going to be with, but I would welcome an Asian counterparty.
To contact the author of this story: Naureen S Malik in New York at nmalik28@bloomberg.net.
To contact the editor responsible for this story: Matthew Philips at mphilips3@bloomberg.net.
©2017 Bloomberg L.P.
