Energy Transfer seals long-term Lake Charles LNG deal with Shell

Energy Transfer, the developer of the proposed Lake Charles LNG export facility in Louisiana, has signed a long-term supply deal with a unit of LNG giant Shell.

Under the SPA, Energy Transfer LNG, a unit of Energy Transfer, would supply 2.1 million tonnes of LNG per year from Lake Charles to Shell NA LNG on a free-on-board basis for a period of 20 years, according to a statement.

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, but the firm has still to take a final investment decision on the Lake Charles LNG export project.

The firm said the deal would become fully effective upon the satisfaction of the conditions precedent, including taking FID.

Energy Transfer seals long-term Lake Charles LNG deal with Shell
Image: Energy Transfer

Six deals in five months

Energy Transfer said it has announced six SPAs in the last five months, bringing the total amount of LNG contracted from its Lake Charles LNG export facility to nearly 8 mtpa.

The customers include China Gas, Gunvor, ENN, and SK Gas.

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.

Back in 2020, Shell announced a decision to pull out of the Lake Charles LNG project.

Shell entered the project in its 2016 combination with BG Group.

“We have had a long-standing relationship with Shell and its predecessor BG Group, as a customer of our regasification facility at Lake Charles,” Tom Mason, president of Energy Transfer LNG said in the statement.

“It is great to have Shell re-engaged in the project as a LNG offtake customer,” he said.

Steve Hill, executive VP energy marketing, Shell said this agreement “will enable us to further meet the increasing demand for LNG and positions Shell as a leading buyer of LNG from the US – which in 2021 became the world’s biggest LNG supplier.”

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