Energy Transfer LP announced its subsidiary, Energy Transfer LNG Export, LLC (Energy Transfer LNG), has entered into a 20-year LNG Sale and Purchase Agreement (SPA) with Kyushu Electric Power Company, Inc. related to its Lake Charles LNG project.
This follows Energy Transfer’s recent announcement of a Heads of Agreement (HOA) with MidOcean Energy for approximately 5.0 million tonnes per annum (mtpa) of LNG production from Lake Charles LNG. Energy Transfer LNG also recently signed a SPA with an international energy company for 1.0 mtpa of LNG and an HOA with a German energy company for 1.0 mtpa of LNG.
Under the SPA with Kyushu, Energy Transfer LNG will supply up to 1.0 mtpa of LNG. The LNG will be supplied on a free-on-board (FOB) basis, and the purchase price will consist of a fixed liquefaction charge and a gas supply component indexed to the Henry Hub benchmark. The obligations of Energy Transfer LNG under the SPA are subject to Energy Transfer LNG taking a positive final investment decision (FID) on the Lake Charles LNG project and satisfying other conditions precedent.
"We are proud to be selected as an LNG supplier by Kyushu, one of Japan’s leading energy companies," said Tom Mason, President of Energy Transfer LNG. "Kyushu has been supportive of Lake Charles LNG for a long time and we appreciate their loyalty. We are also pleased that Lake Charles LNG continues to make strong strides toward full commercialization."
The agreement marks Kyushu’s first long-term LNG procurement contract from the U.S. and will further diversify its procurement sources and enhance the stability of its LNG supply.
If Energy Transfer LNG reaches a positive FID, the Lake Charles LNG export facility would be constructed on the existing brownfield regasification facility site and will capitalize on Energy Transfer’s four existing LNG storage tanks, two deep water berths and other LNG infrastructure. Lake Charles LNG would also benefit from its direct connection to Energy Transfer's existing Trunkline natural gas pipeline system, which in turn provides connections to multiple intrastate and interstate pipelines. These pipelines allow access to multiple natural gas producing basins, including the Haynesville, the Permian and the Marcellus Shale. Energy Transfer is one of the largest and most diversified midstream energy companies in North America, with a strategic footprint in all of the major U.S. production basins.
