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New Player In Lake Charles LNG Project: China Gas’ First Long-Term Agreement with Energy Transfer06/08/2022
According to a June 5 press release, China Gas Hongda Energy Trading Co. Ltd., a subsidiary of China Gas Holdings Ltd., has made an LNG sale and purchase agreement (SPA) with Energy Transfer LNG Export, LLC, a subsidiary of Energy Transfer LP, concerning its Lake Charles LNG project.
In the course of the 25-year contract, Energy Transfer LNG will provide 0.7 million tonnes per annum (mtpa) of LNG to China Gas on a free-on-board basis. The purchase price is indexed to the Henry Hub benchmark plus a fixed liquefaction charge, with first deliveries expected as early as 2026.
Being a premier natural Chinese gas distribution company, China Gas enchants Energy Transfer LNG to sign the 25-year LNG offtake agreement.
As Tom Mason, the president of Energy Transfer admitted, SPA would bring the total amount of LNG contracted from Lake Charles LNG export facility to approximately 6.0 mtpa and it would be an important step towards the goal of reaching FID [final investment decision] later this year.
To become fully effective, the agreement will go upon the satisfaction of the conditions precedent, including Energy Transfer LNG reaching FID.
From the direction of China Gas, it will be a significant step along the way to realizing China’s carbon peaking and carbon neutrality goals as it is their first long-term agreement.
This company is based in Hong Kong and owns a total of 652 city and township gas projects with concession rights, 32 natural gas long-distance pipeline transmission projects, 113 LPG distribution projects, and 554 CNG/LNG refilling stations for vehicles, also it has the license to import and export LNG and other fuel products in China.
Concerning Energy Transfer, it is a publicly-traded limited partnership based in Dallas with core operations that include complementary natural gas midstream, intrastate, and interstate transportation, and storage assets: crude oil, NGL, refined product transportation, and terminalling assets; and NGL fractionation, with assets in every major U.S. basin.
Their Lake Charles Project is fully permitted for three 5.5 mpta liquefaction trains that will utilize existing infrastructure. It will also benefit from abundant natural gas supply and proximity to major pipeline infrastructure, including Energy Transfer’s vast pipeline network. The project is estimated to create up to 5,000 jobs during construction and 200 full-time positions when fully operational.
This permit-ready project will add 240 acres to Lake Charles LNG’s overall footprint which will allow for the development of a liquefaction and export facility. It is the only brownfield project among those in the pre-FID process.
Moreover, the technology proposed for the project is designed to make it one of the most efficient and cleanest operating LNG facilities in the United States with air emissions expected to be well below both U.S. and Louisiana state limits.
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The U.S. natural gas pipeline network is a complex system of pipelines that transport natural gas from production areas to consumers across the country. The pipeline network consists of three main types of pipelines: gathering pipelines, transmission pipelines, and distribution pipelines. Gathering pipelines are small-diameter pipelines that transport natural gas from production wells to processing facilities or larger transmission pipelines. Transmission pipelines are large-diameter pipelines that transport natural gas over long distances, sometimes across multiple states. Distribution pipelines operate at low pressure and are located in or near urban areas. They are often referred to as "utility pipelines" because they are typically owned and operated by local gas utility companies.
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