S Korea's SK Gas to buy supply from Energy Transfer's Lake Charles LNG

South Korea's SK Gas will buy 400,000 mt/year of supply from Energy Transfer's proposed Lake Charles LNG export facility in Louisiana under an 18-year deal announced by the US operator May 3.

Some 5.1 million mt/year of the terminal's capacity has now been covered under long-term agreements, all of which were announced within the last month or so.

Amid high spot prices in end-user markets, there has been a flurry of commercial activity during the first several months of 2022 tied to current and proposed US LNG export terminals, which offer long-term contracts with fixed fees and destination flexibility.

The long-term deal with SK Gas Trading is on a free-on-board basis. The purchase price is indexed to the US Henry Hub benchmark plus a fixed liquefaction charge. First deliveries are expected to begin as early as 2026. The sale and purchase agreement will take effect upon Energy Transfer meeting certain conditions, including taking a final investment decision on the project.

The other long-term supply deals tied to Lake Charles LNG are with Swiss commodity trader Gunvor, announced May 2, and with China's ENN and affiliates, announced March 29.

Energy Transfer, which lost Shell as a joint venture partner in 2020, has proceeded with the development of Lake Charles LNG. Energy Transfer may reduce the size of the project to two trains with 11 million mt/year of LNG capacity, from three trains with 16.45 million mt/year of capacity, the company said in a US regulatory filing in February.