Energy Transfer LP (ET) said Monday it has agreed to supply a Chinese utility with 0.7 million metric tons/year (mmty) of liquefied natural gas (LNG) from its proposed Lake Charles LNG export terminal in Louisiana.
The 25-year deal between Energy Transfer LNG Export LLC and a subsidiary of China Gas Holdings Ltd. is the fifth sales and purchase agreement (SPA) ET has signed this year to bring the plant closer to reality. The company is targeting a final investment decision (FID) for the 16.45 mmty facility later this year.
Under the latest SPA, ET would supply LNG on a free-on-board basis at prices indexed to Henry Hub plus a fixed liquefaction fee. ET continues to indicate that first deliveries from the Lake Charles facility could begin in 2026.
Long-term contracting of LNG supplies has risen sharply since last year as spot prices have jumped and buyers have looked to shield themselves from volatility and lock in better terms. Russia’s invasion of Ukraine also has increased competition for the super-chilled fuel as buyers look to diversify their supplies in a pivot away from the pariah state.
So far in 2022, U.S. export projects have signed long-term deals to supply more than 15 mmty of LNG, helping another wave of LNG terminals move closer to sanctioning. Venture Global LNG Inc. made a positive FID on its Plaquemines LNG terminal last month following a series of long-term supply deals.
Nearly 7 mmty of this year’s U.S. offtake agreements have been signed by buyers in China.
“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,” said Yalong Qi, general manager of China Gas subsidiary China Gas Hongda Energy Trading Co. Ltd.
In addition to China Gas, ET has signed long-term deals since March with ENN Natural Gas Co. Ltd. of China, trader Gunvor Singapore Pte. Ltd. and SK Gas Trading LLC of South Korea for nearly 6 mmty of LNG supplies from Lake Charles.
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