Energy Transfer, MidOcean Energy Sign Agreement to Jointly Develop Lake Charles LNG Export Facility
MidOcean Energy to Fund 30.0% of Project Costs and be Entitled to 30.0% of LNG Production
Energy Transfer LP and MidOcean Energy (“MidOcean”) have announced that Energy Transfer’s subsidiary, Energy Transfer LNG Export, LLC, has entered into a Heads of Agreement (“HOA”) related to its Lake Charles LNG project with MidOcean, a liquified natural gas (“LNG”) company formed and managed by EIG Global Energy Partners (“EIG”), a leading institutional investor in the global energy and infrastructure sectors. The HOA provides a non-binding framework of the major terms for the joint development of the Lake Charles LNG project.
Pursuant to the HOA, MidOcean would commit to fund 30% of the construction costs and be entitled to receive 30% of the LNG production (approximately 5.0 million tonnes per annum). The HOA also provides that MidOcean Energy will have the option to arrange for gas supply for its share of LNG production and that MidOcean will commit to long-term gas transportation on Energy Transfer pipelines. The obligations of Energy Transfer LNG and MidOcean Energy under the HOA will be subject to both parties’ determination to take a positive final investment decision ("FID") as well as the satisfaction of other conditions precedent.
“We are pleased to have MidOcean partner with us on our Lake Charles LNG project and we believe its participation will provide a significant catalyst towards reaching positive FID,” said Tom Mason, president of Energy Transfer LNG. “MidOcean’s management team brings a wealth of LNG experience to the project. In addition, Energy Transfer and EIG already have an established relationship that will only be strengthened through this transaction.”
De la Rey Venter, CEO of MidOcean, said: “This agreement has the potential to transform MidOcean’s portfolio, providing a material volume of advantaged Atlantic Basin supply. This complements our current assets, which are all located in the Asia-Pacific Basin. Geographical diversity is a key enabler for value delivery from an LNG portfolio. MidOcean considers Lake Charles LNG to be one of the most advantaged US LNG projects under development. We look forward to a deep and fruitful multi-decade partnership with Energy Transfer.”
If Energy Transfer LNG reaches a positive FID, the LNG export facility would be constructed on the existing brownfield regasification facility site and would capitalize on four existing LNG storage tanks, two deep water berths and other LNG infrastructure. Lake Charles LNG would also benefit from its direct connection to Energy Transfer’s existing Trunkline pipeline system that in turn provides connections to multiple intrastate and interstate pipelines. These pipelines allow access to multiple natural gas producing basins, including the Haynesville, the Permian and the Marcellus Shale. Energy Transfer is one of the largest and most diversified midstream energy companies in North America, with a strategic footprint in all of the major U.S. production basins.