Energy Transfer is understood to be working with a bulge-bracket bank in the run-up to a potential debt financing which could take place next year for its Lake Charles LNG export terminal project on the U.S. Gulf Coast.

JP Morgan's London branch will be tasked with raising debt for the project, says a person familiar with the situation.

The Dallas-based developer and gas pipeline operator is considering undertaking the conversion of the existing Lake Charles LNG terminal from an import to an export facility in a 50:50 partnership with Shell US LNG.

Shell would fund its half of the project on balance sheet, while JP Morgan would likely begin raising funds on behalf of Energy Transfer in about 12 to 18 months, says the source.

Spokespeople for JP Morgan in New York and Energy Transfer in Dallas declined to comment. Officials at Shell did not immediately respond to an inquiry.

Timeline

Energy Transfer and Shell announced on March 25 that they had signed a project framework agreement as a step toward a final investment decision, and that they plan to issue an invitation for engineering, procurement and construction firms to start bidding for contracts soon.

Construction on the project is expected to take four to five years and the developers are aiming to bring it online in late 2024 or early 2025.

Energy Transfer will be the site manager and project coordinator prior to final investment decision, while Shell will act as project lead. Shell will operate the project when it is complete.

The project will convert Energy Transfer’s existing import and regasification terminal in Lake Charles, La., into an export facility with a liquefaction capacity of 16.45 million tonnes per annum.

Royal Dutch Shell is the sole customer for the existing regasification facility under the terms of a regasification services agreement expiring in 2030.

Permitting 

The export project received the blessing of the U.S. Federal Energy Regulatory Commission in 2015 and holds permits from the Department of Energy to export LNG to free-trade agreement and non-free-trade agreement countries.

“Lake Charles presents a material, competitive liquefaction project with the potential to provide Shell with an operated LNG export position on the U.S. Gulf Coast by the time global supply is expected to tighten in the mid-2020’s,” said Frederic Phipps, Shell’s vice president, Lake Charles LNG, in a statement. “Our partnership with Energy Transfer plays to our respective strengths. Together, we are expertly positioned to advance a project that could provide customers in AsiaEurope and the Americas with cleaner, reliable energy for decades to come.”

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