The Hague-based energy giant Shell is withdrawing from the planned Lake Charles liquefied natural gas export project in Louisiana.
The Lake Charles LNG export project is a 50-50 joint venture between Shell and US company Energy Transfer.
The latter will now fully take over the development of the project.
Shell said in a statement it would continue to support Energy Transfer with the ongoing bidding process for the EPC contract.
This includes planing a phased handover of the LNG project’s remaining activities.
Maarten Wetselaar, Shell’s head for integrated gas said “this decision is consistent with the initiatives we announced last week to preserve cash and reinforce the resilience of our business”.
He added that while Shell still believes in the long-term viability and advantages of the project, the “time is not right for Shell to invest.”
Lake Charles project seeks to convert Energy Transfer’s existing import terminal to an LNG export facility.
The project has a proposed liquefaction capacity of 16.45 mtpa for US natural gas export to global customers.
Shell entered the project in its 2016 combination with BG Group.
The Covid-19 coronavirus pandemic has hit the industry very hard slashing prices and crippling demand.
The pandemic effects weighed down on oil prices pushing them to an 18-year low on Monday .
Energy Transfer may reduce project size, bring new partners
Energy Transfer said in a separate statement on Monday it would evaluate various alternatives to advance the LNG export project
This includes bringing in one or more equity partners and reducing the size of the project.
Energy Transfer may reduce the project size from three production units to two trains or 11 mtpa of total capacity.
“We remain focused on pursuing this project on a disciplined, cost-efficient basis,” said Tom Mason, executive vice president and LNG head at Energy Transfer.
He added that the decision to make an FID would be dependent on market conditions and capital expenditure considerations.