Energy Transfer inks three non-binding Lake Charles LNG deals

Texas-based Energy Transfer said it had entered into three non-binding deals related to long-term LNG offtake for its proposed Lake Charles LNG export facility in Louisiana.

According to a statement by Energy Transfer, the offtake volumes under the three HOAs total 3.6 mtpa of LNG.

One of the agreements specifies that a Japanese consortium would purchase 1.6 mtpa for a 20-year term, subject to an option to convert the offtake arrangement to an equity participation providing for the same volume of LNG, the firm said.

Chesapeake and Gunvor

Under the second deal, Chesapeake Energy Marketing would supply to Lake Charles LNG volumes of natural gas sufficient to produce 1 mtpa of LNG for a period of 15 years and, post liquefaction, Gunvor Singapore would purchase LNG from Chesapeake at a price indexed to the Japan Korea Marker (JKM) for a period of 15 years.

Earlier this year, US shale gas producer Chesapeake Energy signed a heads of agreement with Geneva-based trader Gunvor to supply the latter with up to 2 million tonnes of LNG per year.

Chesapeake and Gunvor said at the time they will jointly select the “most optimal liquefaction facility” in the US to liquefy the gas produced by Chesapeake and deliver LNG to Gunvor on a free-on-board basis with a targeted start date in 2027.

As per the third HOA, Energy Transfer said this deal is with a US customer and relates to a tolling arrangement for 1 mtpa for a 15-year term.

The firm did not provide any additional details.

Energy Transfer inks three non-binding Lake Charles LNG deals
Image: Energy Transfer

“Important” deals

NextDecade said the HOAs remain subject to the negotiation and execution of definitive agreements.

“We are pleased with the continued confidence of our customers in the Lake Charles LNG project,” Tom Mason, president of Lake Charles LNG, said in the statement.

“These HOAs are important for the successful development of the project, along with the continuation of certain pre-FID work with one of our EPC contractors,” Mason said.

DOE decision

This announcement follows a recent decision by the US DOE to deny a rehearing request by Energy Transfer’s Lake Charles LNG.

A spokesperson for Energy Transfer told LNG Prime at the time that the company plans to continue to develop the project which may include the use of Lake Charles’ existing DOE export authorization.

In April this year, the department declined the request to extend the deadline to start exports by December 2028.

Lake Charles LNG said in the request it had made “substantial progress” in the commercial development of the development, as evidenced by fully-executed long-term LNG offtake contracts for 7.9 million tons of LNG per annum, about half of the FERC-approved LNG production capacity of the facility.

Energy Transfer announced six SPAs during last year and the customers include China GasGunvorENNSK Gas, and Shell.

The firm said it is in “active discussions” with customers related to the remaining capacity.

Energy Transfer also said that it obtained EPC bids from two contractors in May this year.

The company’s Lake Charles LNG project seeks to convert the company’s 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.

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