U.S. energy company Energy Transfer entered three non-binding agreements to sell LNG from its proposed Lake Charles export plant in Louisiana.
The agreements, called Heads of Agreements (HOAs), total 3.6 million tonnes per annum (MTPA) of LNG, Energy Transfer said in a release on July 12.
The agreements come even though the U.S. Department of Energy has so far refused to extend Lake Charles' authorization to sell LNG to non-Free Trade Agreement (FTA) countries beyond December 2025.
Energy Transfer, however, has vowed to keep developing Lake Charles even though it usually takes about four years for a project to produce first LNG after construction starts. The company has not yet made a final investment decision (FID) to start building Lake Charles.
"These HOAs are important for the successful development of the project, along with the continuation of certain pre-FID work with one of our EPC (engineering, procurement and construction) contractors," Tom Mason, president of Lake Charles LNG, said in the release.
Based on an industry estimate of around $800 million per MTPA, it could cost about $13.2 billion to build the 16.5-MTPA Lake Charles project, before financing and other costs.
In one of the three HOAs, Energy Transfer said a Japanese consortium would purchase 1.6 MTPA of LNG for a 20-year term.
In another HOAs, a unit of U.S. energy company Chesapeake Energy would supply enough gas to produce 1.0 MTPA of LNG for 15 years and, post liquefaction, a unit of Swiss commodities trader Gunvor would purchase LNG from Chesapeake at a price indexed to the Japan Korea Marker (JKM) for 15 years.
JKM is the benchmark gas price in Asia.
Energy Transfer said the third HOA was with a U.S. customer and relates to a tolling arrangement for 1.0 MTPA for a 15-year term.
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