„Japan and India are important U.S. allies and trading partners in need of safe natural gas sources, and Sumitomo and GAIL are high-quality companies working to meet these needs,“ said Thomas F. Farrell II, President and CEO of Dominion. „We believe that the agreements we have signed meet very important economic objectives for the three nations.“ Under the agreements, Gail and Sumitomo will purchase the gas themselves and pay for the facility, which will have a capacity of 5.25 million tonnes of LNG per year (mtpa). Both companies will be able to export 2.3 million tonnes per year. Customers purchase their own natural gas and deliver it to the Cove Point pipeline. Dominion will liquefy, store and load the gas in ships transported to the Chesapeake Bay plant. Dominion will offer a toll service and will not take possession of natural gas or LNG. The Sumitomo Corporation Group entered into a terminal service agreement for the use of Dominion`s LNG facility through Pacific Summit Energy, a wholly owned subsidiary of Sumitomo Corporation, in 2012.
Sumitomo Corporation also created a joint venture with Tokyo Gas in 2014 with ST Cove Point. Since then, the agreement has been entrusted to this newly created joint venture. ST Cove Point was created to develop and implement a sustainable operating system for the export of LNG from the terminal. Cove Point produces approximately 5.2 million tonnes per year from a single train and has toll contracts with Gas Authority of India and Sumitomo Corp and Tokyo Gas of Japan. „No other proposed liquefaction plant can offer strategic value in terms of supply and location,“ Farrell said. „We believe that after reaching these milestones of signed terminal service agreements, an EPC contract and our bid, we are well positioned to obtain approval from the U.S. Department of Energy to advance this important infrastructure project.“ Democratic Whip Steny Hoyer (5-MD) in the U.S. House of Representatives said, „I am pleased that Dominion has made progress in securing terminal agreements with two major trading partners. The proposed LNG project, Cove Point, has the potential to make a significant contribution to the southern Maryland economy. Today`s announcement helps ensure the sustainability of the project and brings us closer to job creation that is expected to lead to development in Calvert County and Maryland. One of the features of a terminal service contract is the outsourcing of a liquefaction service to a terminal operator instead of simply purchasing prefabricated LNG.
This operation, called the „toll concept,“ requires that customers who deserve it be able to purchase the natural gas to liquefy on the terminal themselves. In this project, Pacific Summit Energy is responsible for the supply of natural gas. Dominion filed a building permit with the Federal Energy Regulatory Commission on Monday and is still awaiting approval from the Department of Energy to export gas to countries that do not have free trade agreements with the United States, including Japan and India. Customers have also signed previous contracts for the 88-mile Cove Point pipeline, which connects the facility to an intergovernmental pipeline node in Northern Virginia. Indian state-owned Company Gail and Japan Smitomo have committed to using Dominion for $3.5 billion of LNG facilities, which will liquefy U.S. gas for transportation to tankers abroad by 2017, pending government approval, as the companies announced Monday. In exchange for this transaction, Dominion would receive approximately $1.3 billion in cash and transfer approximately US$430 million to the existing debt of Questar Pipelines to Berkshire Hathaway.