Energy Transfer to Supply Chevron With Additional LNG

Pipeline operator Energy Transfer said on Wednesday it will supply U.S. oil major Chevron with an additional 1 million tonnes per annum (mtpa) of liquefied natural gas from its Lake Charles LNG export facility.

The 20-year agreement brings the total volume of LNG supply contracted by Chevron to 3 mtpa, following the initial 2 mtpa agreement signed last year.

Commercial activity within the sector has gained momentum in the U.S., the world's largest LNG exporter, after President Donald Trump lifted a moratorium on new LNG export permits soon after taking office in January.

The Lake Charles project was among the first facilities to be impacted after the Biden administration refused to grant an extension to Energy Transfer's export license to countries other than those that have free-trade agreements with the U.S.

The company is now close to receiving a go-ahead on the Lake Charles facility.

Energy Transfer said it will supply the super-chilled gas to Chevron on a free-on-board basis, adding that the purchase price will consist of a fixed liquefaction charge and a gas supply component indexed to the Henry Hub benchmark.

The agreement is subject to Energy Transfer reaching a positive final decision on the Lake Charles project.

LNG developers typically use sales and purchase agreements when approaching banks for loans to develop production facilities.

The Chevron agreement builds on Energy Transfer's efforts in securing long-term contracts for the Lake Charles facility.

The pipeline operator inked a deal with Japan's Kyushu Electric Power for 1 mtpa of LNG in May. In April, it entered a nonbinding agreement with MidOcean Energy for 5 mtpa.

Shares of both Chevron and Energy Transfer rose marginally in premarket trading.

(Reuters)