Energy Transfer in advanced talks to sell remaining Lake Charles LNG volumes

During the company’s earnings call on Wednesday, Energy Transfer’s co-CEO, Tom Long, said that Energy Transfer continues to make “substantial” progress towards commercialization of the Lake Charles LNG project.

Long noted that Lake Charles LNG signed a heads of agreement with MidOcean Energy, the LNG unit of US-based energy investor EIG, which provides a non-binding framework for the joint development of the LNG project.

Pursuant to the HoA, MidOcean would commit to fund 30 percent of the construction cost and be entitled to 30 percent of the LNG production, or about five mtpa.

In addition, Lake Charles signed twenty-year SPAs with Kyushu Electric Power and Chevron.

“On the marketing side, we’re in advanced discussions with multiple parties for our remaining capacity and are getting close to our target of 15 million metric tons per annum,” Long said.

“Some of our potential offtake customers are also interested in equity in the project, which if concluded would reduce our external financing requirements,” he said.

“As we have previously stated, we expect to sell equity in the project to reduce Energy Transfer’s ownership to approximately 25 percent,” Long said.

“Over the last several months, we have been working with our financial advisers to finalize marketing materials as we prepare for the launch of the equity sell-down process,” he said.

EPC contract and FID

Energy Transfer’s Lake Charles LNG project seeks to convert its existing regasification terminal to an LNG export facility.

It has a proposed liquefaction capacity of 16.45 mtpa and includes three trains and also modifications to the Trunkline Gas pipeline.

In September last year, Energy Transfer executed an EPC agreement with a joint venture of France’s Technip Energies and US-based KBR.

Discussing the Lake Charles LNG EPC contract, Technip Energies CEO Arnaud Pieton recently said that the “price refresh is still ongoing.”

Energy Transfer’s co-CEO, Marshal McCrea, also answered a question on the EPC contract during the call on Wednesday.

“We’ve had our own expectations as we’re waiting kind of for the numbers that have come in and they’re dead on to what we expected. We certainly are including tariff, which seem to change daily, but any kind of tariff impact on that. So we’re very pleased of where the EPC contract looks like it’s going to come out,” McCrea said.

“We are pushing hard to get to the finish line and we’re going do everything we can to make that happen. But we still got some work to do, but there’s a lot of interest on this project and we believe we’ll get there over the next couple of months,” he said.

“And then as we said, kick off the financing and get it to FID as soon as we can,” McCrea said.