Energy Transfer, ENN Sign 20-Year Agreement to Ship Lake Charles LNG to China
Energy Transfer LP has signed a 20-year agreement to ship liquefied natural gas (LNG) to a Chinese energy company.
ENN Natural Gas and ENN Energy Holdings Limited have entered into two LNG sale and purchase agreements with Energy Transfer LNG Export LLC, a subsidiary of Energy Transfer, related to its Lake Charles LNG project.
As one of the largest independent energy companies in China, ENN Natural Gas’s business encompasses the entire natural gas value chain, from downstream distribution, to midstream transportation and storage, and upstream production and procurement. Through its subsidiary, ENN Energy Holdings, one of the largest natural gas distributors in China, ENN Natural Gas owns 252 city gas projects in China, serving a population of 124 million. ENN Natural Gas owns and operates Zhoushan LNG Terminal in Zhejiang Province, China, the country’s first large-scale private LNG terminal. During 2021, ENN Natural Gas’s total natural gas sales volume was 37.2 billion cubic meters (bcm), accounting for about 10 percent of China’s total consumption.
Under the two sales and purchase agreements, announced March 29, Energy Transfer LNG Export is expected to supply 1.8 million tonnes of LNG to ENN Natural Gas, and 0.9 million tonnes of LNG to ENN Energy, per annum on a free-on-board (FOB) basis. The purchase price is indexed to the Henry Hub benchmark plus a fixed liquefaction charge. Both agreements are for a term of 20 years, and first deliveries are expected to commence as early as 2026. The agreements will become fully effective upon the satisfaction of the conditions precedent by Energy Transfer LNG.
“The signing of these long-term SPAs will further enrich ENN’s LNG resources, expand resource supply channels and improve ENN’s natural gas supply capacity to meet the rapidly growing natural gas demand in the domestic market,” said Zheng Hongtao, president of ENN Natural Gas and vice chairman of the board of directors of ENN Energy Holdings. “It also provides our customers with better resources and services, ensures natural gas supply nationwide, and contributes to the low-carbon transformation of energy structure.”
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. The core operations include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGL) and refined product transportation and terminalling assets; and NGL fractionation. The company owns and operates approximately 120,000 miles of pipelines and associated energy infrastructure across 41 states transporting approximately 30 percent of the United States’ oil and natural gas.
“We are very pleased to have ENN as a customer. The execution of these two [agreements] represents a significant event in moving the Lake Charles LNG project towards FID. We are experiencing strong demand for long-term offtake contracts for Lake Charles LNG and we are optimistic that we will be in a position to take a positive FID by year end,” said Tom Mason, president of Energy Transfer LNG. “The Lake Charles LNG project is expected to be financed primarily through infrastructure funds and strategic partners, with Lake Charles LNG retaining an equity stake and operatorship of the liquefaction facility.”
The Lake Charles project will be constructed on the existing brownfield regasification facility and will capitalize on four existing LNG storage tanks, two deep water berths and other infrastructure. 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.
Relying on industry best practices, ENN NG has built an intelligent operation platform for the natural gas industry – GreatGas.cn, which accelerates the aggregation of demand, resources, reserves, and delivery ecology of the natural gas industry. It also innovates and develops digital intelligence services, and promotes the digital intelligence upgrade of the natural gas industry.China, Energy Transfer, ENN Natural Gas, Lake Charles LNG Export Co. LLC, LNG exports, Sales and Purchase Agreement (SPA)
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