Page 11 - NorthAmOil Week 18 2022

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Energy Transfer secures long-term

deals with Gunvor, SK for US LNG

GLOBAL SWISS-BASED commodity trader Gunvor has of the progress being made towards FID.
agreed to buy 2mn tonnes per year (tpy) of LNG Energy Transfer’s Lake Charles LNG
from Energy Transfer’s proposed Lake Charles export facility will be constructed on the
LNG export terminal. existing brownfield regasification facility and
Gunvor agreed to a 20-year free-on-board will capitalise on four existing LNG storage
(FOB) deal as European buyers look to tie in tanks, two deepwater berths and other LNG
long-term supply deals for US LNG supplies at infrastructure. This brings
below the current high spot prices. Lake Charles LNG will also benefit from its
Energy Transfer also said on May 3 that it had direct connection to Energy Transfer’s existing Energy Transfer’s
signed a 400,000 tpy sale and purchase agree- Trunkline pipeline system that in turn provides
ment (SPA) with South Korea’s SK Gas Trading connections to multiple intrastate and interstate SPAs for Lake
for gas from Lake Charles LNG. pipelines. These pipelines allow access to mul-
This brings Energy Transfer’s SPAs for Lake tiple natural gas producing basins, including Charles to four
Charles to four announced in the last four weeks, the Haynesville, the Permian and the Marcellus announced in the
and brings the total amount of LNG contracted shale.
from the planned terminal to 5.1mm tpy. There has been a rush to secure long-term US last four weeks.
Europe is trying to reduce its exposure to LNG export deals lately involving both Euro-
Russian pipeline gas as the war in Ukraine causes pean and Asian buyers. However, one worry
price volatility and sanctions on Russian gas. for US LNG developers is they face rising prices
Gunvor and SK will both pay purchase prices across the world, as US exporters are charging
indexed to the US Henry Hub benchmark plus more because of soaring costs.
a fixed liquefaction charge. First deliveries are LNG project developers will need to pass on
anticipated from 2026. costs to the buyer satisfy lenders and unlock pro-
The deals will become fully effective upon ject finance to reach FID.
the satisfaction of certain conditions, includ- This risk is that while buyers need to pay high
ing Energy Transfer taking a final investment prices now, markets could change in 10 years,
decision (FID) on the Lake Charles project. while Europe’s commitment to reach net zero
This is being targeted for the end of the year and by 2050 will reduce demand for US LNG in the
Energy Transfer pointed to the deals as evidence long run.™

Week 18 05•May•2022 www. NEWSBASE .com P11