Shell chooses cash over contracts to bankroll Lake Charles LNG

Lake Charles LNG
(Courtesy Lake Charles LNG) The existing Lake Charles LNG facility is circled in blue; the expansion, in orange.

Royal Dutch Shell will bankroll its half of the joint venture with Energy Transfer to build the Lake Charles LNG export terminal with its existing portfolio rather than with new long-term contracts tied the facility, S&P Global Platts reports.

That ability gives Shell and other majors an advantage over their competition in the LNG race. The company already has its hands in one-fifth of the world’s existing production.

As S&P Global Platts reports, ExxonMobil and Qatar Petroleum advanced Golden Pass LNG in Texas last year without announcing any long-term offtake contracts with external buyers tied to that facility, while the Shell-backed LNG Canada project in British Columbia did the same thing in 2018.

Lake Charles LNG has yet to make a final investment decision, as its Shell and Energy Transfer are awaiting bids from construction contractors offering to build the terminal. If one is reached, Shell plans to use cash to fund its portion of the Lake Charles LNG venture, according to S&P Global Platts. Completion of the 16.45 million tons per year capacity terminal is targeted for late 2025.

Energy Transfer and Shell have signed a Project Framework Agreement to further develop Energy Transfer’s existing Lake Charles LNG import and regasification facility. Its existing infrastructure provides ready access to U.S. gas supply through existing connections to Henry Hub, and connectivity to Energy Transfer’s vast network of natural gas pipelines.

S&P Global Platts has the full story.