Warren Buffett before the Berkshire Hathaway annual shareholder meeting in Omaha, NE.
David A Grogan | CNBC
Berkshire Hathaway Energy has agreed to buy a 50% interest in the Cove Point liquefied natural gas plant for $3.3 billion in cash.
Warren Buffett’s large energy and utilities division bought the stake from domain energy and will now own a 75% limited partnership interest in Cove Point LNG located in Lusby, Maryland. A subsidiary of Brookfield Infrastructure Partners owns the remaining 25%.
While the deal, which was announced Monday, is not large for berkshireit builds on a growing bid for energy infrastructure at the conglomerate as it gains control of one of the rare functional facilities in the US that can export LNG.
“It builds on his long-term theme of energy resources becoming more valuable and ownership of one of the few US LNG exporters,” said Bill Stone, chief investment officer at Glenview Trust and a Berkshire shareholder. .
The Cove Point LNG Terminal has a storage capacity of 14.6 billion cubic feet and a daily dispatch capacity of 1.8 billion cubic feet. The firm has a long-term contract with Sumitomo Corp., a Japanese trading company in which Buffett also invested.
Berkshire Hathaway first purchased a stake in Dominion’s pipeline and storage assets for $4 billion in 2020. Greg Abel, chairman and former CEO of Berkshire Hathaway Energy, previously told CNBC that the deal in 2020 was made. through a strong relationship he had with Dominion’s previous CEO. Tom Farrel.
Abel is now vice president of non-insurance operations at Berkshire Hathaway and the successor to the 92-year-old “Oracle of Omaha.” Buffett said Abel has assumed many of the responsibilities at the conglomerate.
In 2022, Berkshire has proposed spending nearly $4 billion to help generate more wind and solar power in Iowa. At the same time, the conglomerate has dramatically increased its exposure to two traditional energy companies: Occidental Petroleum and Chevron.
“Buffett has liked pipelines for a long time, given his toll bridge-type revenue rather than pure commodity exposure, and this is likely to be similar,” Stone said. “Natural gas prices have come down a lot, but I think most of these exporters are on long-term purchase or payment contracts.”
Natural gas futures have fallen more than 40% this year to $2.709 per million British thermal units.