Energy Transfer Signs 25-Year Deal to Supply LNG to China Gas
Energy Transfer LNG, a unit of Energy Transfer LP, entered into a deal to supply 0.7 million tonnes of liquefied natural gas a year to China Gas Holdings on a free-on-board basis for 25 years, the companies said on Sunday.
China Gas Hongda Energy Trading Co. Ltd, a subsidiary of gas distributor China Gas, has entered into an LNG sale and purchase agreement (SPA) with Energy Transfer, related to its Lake Charles LNG project, the companies said.
“China Gas is a premier natural gas distribution company in China, and we are pleased to enter into this 25-year LNG offtake agreement with them,” Tom Mason, president of Energy Transfer LNG, said. “This SPA brings our total amount of LNG contracted from our Lake Charles LNG export facility to nearly 6.0 MTPA and is an important step towards our goal of reaching FID later this year.”
The purchase price is indexed to the Henry Hub benchmark plus a fixed liquefaction charge. The agreements will become fully effective upon the satisfaction of the conditions precedent, including Energy Transfer LNG taking final investment decision (FID).
“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. It is also an important step along the path to realizing China’s carbon peaking and carbon neutrality goals,” Yalong Qi, general manager of China Gas Hongda Energy Trading Co. Ltd., said.
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. Energy Transfer’s Lake Charles LNG export facility will be constructed on the existing brownfield regasification facility and will capitalize on 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 for the project, including authorizations from the Federal Energy Regulatory Commission, as well as export authorizations from the Department of Energy. Lake Charles LNG will also benefit from its direct connection to Energy Transfer’s existing Trunkline pipeline system that 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.
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