Petrobras, Brazil's state-controlled oil company, said on Tuesday, September 29, that it had signed a long-term liquefied natural gas (LNG) sale and purchase agreement with Cheniere Marketing, a unit of Cheniere Energy, which Folha de S.Paulo describes as the largest LNG producer and exporter in the United States. According to the newspaper, which ran a Reuters report, the contract covers the purchase of 800,000 tonnes of LNG by Petrobras over 22 years.

Cheniere confirmed the deal the same day, with a release on its investor relations site titled "Cheniere and Petrobras Sign Long-Term LNG Sale and Purchase Agreement". Petrobras's own news agency also published a statement on the signing.

In a statement, the company summarized what it expects from the contract:

"The contracting of long-term volumes reflects Petrobras's strategy of reducing exposure to spot LNG market volatility, strengthens risk management of the natural gas portfolio and expands flexibility and security to meet contracts," the company said.

It is the second such deal in a month. In mid-September, Petrobras signed another long-term LNG sale and purchase agreement, with Sempra Infrastructure, the US-based arm of Sempra, according to Folha.

How the gas reaches Brazil

Along the supply chain, Cheniere produces and liquefies the gas in the United States and delivers it by ship. LNG is natural gas chilled into liquid form, which is what allows it to travel by sea. Petrobras pays for the cargoes and gains contracted volumes to serve its natural gas contracts in Brazil.

For Cheniere, the agreement secures a buyer committed for more than two decades. For the Brazilian side, the intended effect, according to Petrobras itself, is less exposure to the spot market, where prices swing, and more security in meeting its gas supply contracts.