Energy Transfer and Shell ink Lake Charles LNG supply deal

U.S. firm Energy Transfer will supply LNG to energy giant Shell from its Lake Charles LNG export facility under a 20-year agreement.

On 24 August, Energy Transfer announced its subsidiary, Energy Transfer LNG Export, has entered into a 20-year LNG sale and purchase agreement (SPA) with Shell NA LNG related to its Lake Charles LNG project.

Under the SPA, Energy Transfer LNG will supply Shell 2.1 million tonnes of LNG per annum (mtpa). The LNG will be supplied on a free-on-board (FOB) basis and the purchase price will be indexed to the Henry Hub benchmark, plus a fixed liquefaction charge.

The first deliveries are expected to start as early as 2026. The deal will become fully effective upon the satisfaction of the conditions precedent, including Energy Transfer LNG taking a final investment decision (FID).

“We believe that Lake Charles is the most competitive LNG project on the Gulf Coast,” said Tom Mason, president of Energy Transfer LNG. “And we are particularly pleased that one of the most prominent LNG industry participants has selected Lake Charles LNG as a supplier.”

Energy Transfer LNG 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 eight mtpa.

Steve Hill, executive vice president Energy Marketing, Shell, said: “LNG is a flexible energy source, connecting demand and supply centres globally and delivering reliable energy to millions of people. We are very happy to be working once again with Energy Transfer and adding Lake Charles volumes to our global LNG supply portfolio. 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.”

Energy Transfer’s Lake Charles LNG export facility’s location will be at the existing brownfield regasification facility; It will use four existing LNG storage tanks, two deep water berths, and other LNG infrastructure. Lake Charles LNG has received all federal, state, and local permits necessary for the construction of the project. The project will also benefit from its direct connection to Energy Transfer’s existing Trunkline pipeline system, which provides connections to multiple pipelines. Shale.