Energy Transfer’s subsidiary, Energy Transfer LNG Export, has entered into a heads of agreement (HOA) with MidOcean Energy, a liquified natural gas (LNG) company managed by EIG Global Energy Partners.
This agreement outlines a non-binding framework for the joint development of the Lake Charles LNG project, with MidOcean committing to funding 30% of the construction costs.
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Under the HOA, MidOcean Energy will receive 30% of the LNG production, equivalent to approximately five million tonnes per annum (mtpa).
Energy Transfer LNG president Tom Mason said: “We are pleased to have MidOcean partner with us on our Lake Charles LNG project and we believe its participation will provide a significant catalyst towards reaching positive FID [final investment decision].
“MidOcean’s management team brings a wealth of LNG experience to the project. In addition, Energy Transfer and EIG already have an established relationship that will only be strengthened through this transaction.”
Additionally, MidOcean will have the option to arrange gas supply for its share of LNG production and commit to long-term gas transportation through Energy Transfer pipelines.
The obligations are subject to a positive FID and other conditions.
MidOcean CEO De la Rey Venter said: “This agreement has the potential to transform MidOcean’s portfolio, providing a material volume of advantaged Atlantic Basin supply. This complements our current assets, which are all located in the Asia-Pacific Basin.
“Geographical diversity is a key enabler for value delivery from an LNG portfolio. MidOcean considers Lake Charles LNG to be one of the most advantaged US LNG projects under development. We look forward to a deep and fruitful multi-decade partnership with Energy Transfer.”
Upon a positive FID, the LNG export facility will be constructed on an existing brownfield regasification facility site.
Situated along the Calcasieu Ship Channel in Lake Charles, Louisiana, the project involves transforming Energy Transfer’s current LNG import and regasification terminal into an export facility.
This conversion leverages existing infrastructure, offering a cost advantage over other proposed LNG projects along the Gulf Coast.
The project is fully permitted for three liquefaction trains, each capable of producing 5.5 million tonnes per annum (mtpa) of LNG.
It will utilise four existing LNG storage tanks, two deep water berths and other LNG infrastructure.
The facility will connect directly to Energy Transfer’s Trunkline pipeline system.
This system provides access to multiple natural gas-producing basins, including the Haynesville, Permian and Marcellus Shale.
Energy Transfer is a diversified midstream energy company with a strategic presence across major US production basins.
Energy Transfer LNG Export, a subsidiary of Energy Transfer, entered into a long-term sales and purchase agreement with Chevron in December last year for LNG supply from the Lake Charles LNG project.
The 20-year agreement covers the delivery of 2mtpa of LNG to Chevron.
Under the terms of the deal, the LNG will be delivered on a free-on-board basis.
