Energy Transfer LP and MidOcean Energy, a LNG company formed and managed by EIG Global Energy Partners, announced on April 9, a significant step forward for the Lake Charles LNG export facility. The two companies have entered into a Heads of Agreement (HOA) outlining the framework for a joint development of the project, signaling strong momentum towards a final investment decision (FID).

Under the terms of the non-binding HOA, MidOcean will commit to funding 30% of the construction costs associated with the Lake Charles LNG project. In return for this substantial investment, they will be entitled to 30% of the facility’s LNG production, which is estimated to be approximately 5.0 million tonnes per annum (MTPA).

The HOA also includes provisions that grant MidOcean the option to manage the gas supply for its share of the LNG production. Furthermore, MidOcean has committed to securing long-term gas transportation on Energy Transfer’s extensive pipeline network. This integrated approach ensures a reliable and efficient supply chain for the project, from upstream gas sourcing to downstream LNG export.

Tom Mason, President of Energy Transfer LNG, expressed his enthusiasm for the partnership, stating, “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. 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, highlighted the strategic importance of the agreement for their portfolio, noting, “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.”

The Lake Charles LNG project holds significant advantages due to its location on the site of an existing brownfield regasification facility. This allows the project to capitalize on pre-existing infrastructure, including four LNG storage tanks, two deep-water berths, and other essential LNG handling equipment. This brownfield advantage is expected to streamline the development process and potentially reduce construction timelines and costs.

Furthermore, the facility benefits from a direct connection to Energy Transfer’s Trunkline pipeline system. This pipeline network provides access to multiple natural gas producing basins across the United States, the prolific Haynesville, Permian, and Marcellus Shale regions. This robust connectivity ensures a diverse and secure supply of natural gas feedstock for the LNG export facility.