Energy Transfer pens 25-year LNG supply deal with China Gas

Energy Transfer said it has signed a long-term deal to supply liquefied natural gas from its proposed Lake Charles LNG export facility in Louisiana to Hong Kong-based natural gas operator and distributor, China Gas.

Under the SPA, Energy Transfer LNG, a unit of Energy Transfer, would supply 0.7 million tonnes of LNG per year from Lake Charles to China Gas Hongda Energy Trading on a free-on-board basis for a period of 25 years, it said in a statement.

In addition, the Henry Hub-indexed deal would include a fixed liquefaction charge, Energy Transfer said.

Energy Transfer expects first deliveries to start as early as 2026.

The firm said the new deal would become fully effective upon the satisfaction of the conditions precedent, including taking FID. It plans to take FID by the end of this year.

5.8 mtpa of contracted LNG supply

Including four prior deals, this new SPA brings the total amount of LNG contracted from the Lake Charles LNG export facility to 5.1 mtpa.

Previously, Energy Transfer announced deals with a unit of South Korea’s SK Gas, a unit of energy and LNG trader Gunvor, as well two long-term supply deals with Chinese independent gas distributor ENN.

Energy Transfer’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 but also modifications to the Trunkline Gas pipeline.

Tom Mason, president of Energy Transfer LNG, welcomed this deal with China Gas, a premier natural gas distribution company in China.

“This SPA brings our total amount of LNG contracted from our Lake Charles LNG export facility to nearly 6 mtpa and is an important step towards our goal of reaching FID later this year,” Mason said.

“This LNG SPA signed with Energy Transfer LNG, which is the first long-term contract of China Gas, strengthens our existing portfolio for the import of LNG, and will further enable China Gas to reliably and securely meet our natural gas customers’ needs,” Yalong Qi, general manager of China Gas Hongda Energy Trading, said.

Qi added that it is also an “important step” along the path to realizing China’s carbon peaking and carbon neutrality goals.

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