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Shell exits proposed Lake Charles LNG project, Energy Transfer take it over

Shell exits proposed Lake Charles LNG project, Energy Transfer take it over

Dallas, March 31 - Neftegaz.RU. Given current market conditions, Shell announces it will not proceed with an equity interest in the proposed Lake Charles LNG project. Accordingly, Energy Transfer will take over as the project developer.

Shell will continue to support Energy Transfer with the ongoing bidding process for the engineering, procurement, and construction contract and then plan a phased handover of the project’s remaining activities.

“This decision is consistent with the initiatives we announced last week to preserve cash and reinforce the resilience of our business,” said Maarten Wetselaar, Director, Integrated Gas and New Energies, Shell.
“Whilst we continue to believe in the long-term viability and advantages of the project, the time is not right for Shell to invest. Through the transition, we will work closely with Energy Transfer.”

Lake Charles LNG is a proposed 50/50 project between Shell and Energy Transfer that seeks to convert Energy Transfer’s existing import terminal to an LNG export facility in Lake Charles, Louisiana.
Shell entered the project in its 2016 combination with BG Group.

The project has a proposed liquefaction capacity of 16.45 mtpa for US natural gas export to global customers. Energy Transfer and Shell signed a Project Framework Agreement in March 2019, under which the 2 companies agreed to share the cost of developing the project.

Since that time companies have jointly undertaken the engineering, procurement and construction (EPC) bidding process. Shell has committed to support Energy Transfer with this process through the receipt of commercial EPC bids in the second quarter of 2020.

Additionally, Shell will continue to support Energy Transfer during a transition period to facilitate Energy Transfer’s plans to continue the development of the project.

Energy Transfer said that it will take over development of the Lake Charles LNG export project.
In this regard, Energy Transfer will evaluate various alternatives to advance the project, including the possibility of bringing in one or more equity partners and reducing the size of the project from 3 trains (16.45 mtpa of LNG capacity) to 2 trains (11.0 mtpa).

“We remain in discussions with several significant LNG buyers from Europe and Asia regarding LNG offtake arrangements as well as, in some cases, a potential equity investment in the project,” said Tom Mason, Executive Vice President and President - LNG.

“In light of the advanced state of the development of the project, we remain focused on pursuing this project on a disciplined, cost efficient basis and, ultimately, the decision to make a final investment decision will be dependent on market conditions and capital expenditure considerations.”

To read this news in Russian.