Page 5 - GLNG Week 13 2022

GLNG COMMENTARY GLNG

The Lake Charles LNG
export project would
involve repurposing an
existing import plant.

of Russian gas, and is reportedly considering would capitalise on existing infrastructure at
deploying a floating storage and regasification the site, which would help construction move
unit (FSRU) to boost its import capacity. swiftly.
Whether Engie or other French companies “The execution of these two SPAs represents
including TotalEnergies seek out more US LNG a significant event in moving the Lake Charles
remains to be seen. In the meantime, Guang- LNG project towards FID. We are experiencing
dong Energy has acknowledged the energy strong demand for long-term offtake contracts
transition potential of procuring LNG from the for Lake Charles LNG and we are optimistic
Rio Grande project. that we will be in a position to take a positive
“Henry Hub-linked LNG will be an impor- FID by year-end,” stated ET LNG’s president,
tant part of our LNG portfolio as we transit to a Tom Mason. “The Lake Charles LNG project
greener future and optimise our resource pro- is expected to be financed primarily through
curement,” stated Guangdong Energy Natural infrastructure funds and strategic partners, with
Gas’ chairman, Zhu Zhanfang, in a March 24 Lake Charles LNG retaining an equity stake and
statement. “We look forward to a long-lasting operatorship of the liquefaction facility.”
and fruitful co-operation with NextDecade, not ENN, for its part, said the SPAs would expand
necessarily just in LNG supply, but potentially in its resource supply channels and improve its
carbon capture and storage as well.” capacity to meet growing domestic gas demand
in China. The company operates the first large-
Lake Charles SPAs scale private LNG terminal in China, Zhoushan
On March 29, Energy Transfer said that its sub- LNG. It also has an SPA with Cheniere for
sidiary, Energy Transfer LNG Export (ET LNG), 900,000 tpy of LNG over a 13-year period start-
agreed to supply 1.8mn tpy of LNG to ENN Nat- ing in mid-2022.
ural Gas and 900,000 tpy of the super-chilled fuel This year, Chinese
to ENN Energy Holdings. What next?
The price of the LNG will be indexed to China recently became the world’s largest companies also
Henry Hub, plus a fixed liquefaction fee, and importer of LNG and its domestic gas demand resold some of
will be supplied on a free-on-board (FOB) is anticipated to keep growing. Chinese compa-
basis. Both SPAs cover a 20-year period and nies will also be aware that competition for LNG their excess US
deliveries could begin in 2026, according to on global markets is intensifying as Europe seeks
Energy Transfer. alternatives to Russian gas. As a result, they may LNG cargoes to
The Lake Charles LNG export terminal is be expediting efforts to lock in supplies.
a brownfield project at the existing site of an This year, Chinese companies also resold European buyers.
import terminal. It is one of several facilities some of their excess US LNG cargoes to Euro-
built when the US expected to be a major LNG pean buyers, having spent much of the past year
importer, before the shale boom not only turned filling up gas inventories. European gas prices
it into an exporter, but helped it become the show no sign of falling any time soon, and this
world’s largest exporter of the fuel in December could prompt Chinese companies to continue
2021. Other conversions of brownfield regasi- seeking out opportunities to resell LNG at a
fication sites to liquefaction include Cheniere’s profit.
Sabine Pass facility, Sempra Energy’s Cameron Regardless of whether they do this or not,
LNG and the privately owned Freeport LNG, all though, the new deals indicate that security of
on the US Gulf Coast. supply is in the spotlight for buyers in Asia as
Lake Charles LNG would consist of three well as in Europe. And US LNG developers are
trains, each with a capacity of 5.5mn tpy, and among those best-positioned to benefit.™

Week 13 01•April•2022 www. NEWSBASE .com P5