NorthAmOil: Buffett to control US LNG plant in $3.3bn transaction

Berkshire Hathaway Energy (BHE) has agreed to buy Dominion Energy’s 50% limited partnership stake in Cove Point LNG in Maryland for $3.3bn.

The purchase will be funded with cash on hand, including cash realised from the liquidation of certain investments.

Upon closing, the Warren Buffett company will own a 75% limited partnership stake in Cove Point LNG. The remaining 25% stake is owned by a subsidiary of Brookfield Infrastructure Partners. BHE operates the facility.

“It builds on their long-term theme of energy resources becoming more valuable and ownership of one of only a few US LNG exporters,” Bill Stone, chief investment officer at Glenview Trust and a Berkshire shareholder, told CNBC.

Cove Point LNG has a long-term sale and purchase agreement (SPA) with Sumitomo Corp.  

“Buffett has liked pipelines for a long time, given their toll bridge-type revenues rather than pure commodity exposure, and this is likely similar,” said Stone to CNBC. “Natural gas prices are down a ton, but I think most of these exporters work on long-term take or pay contracts.”

BHE said that the purchased interest will be held within BHE GT&S, a subsidiary focused on interstate natural gas transmission and storage.