Shell announced on Monday it is exiting a proposed liquefied natural gas (LNG) facility in Lake Charles, Louisiana, citing current market conditions, Kallanish Energy reports.
Energy Transfer will take over as the project developer, after the Anglo-Dutch supermajor decided not to proceed with an equity interest in the project.
“This decision is consistent with the initiatives we announced last week to preserve cash and reinforce the resilience of our business,” said Maarten Wetselaar, director, integrated gas and new energies, Shell. “Whilst we continue to believe in the long-term viability and advantages of the project, the time is not right for Shell to invest.”
Last week, Shell said it is reducing its 2020 capital spending by $5 billion, and it intends to reduce day-to-day operations by as much as $4 billion in the next 12 months.
The company said it will continue to support Energy Transfer with the ongoing bidding process for the engineering, procurement and construction contract and then plan a phased handover of the project’s remaining activities.
The Lake Charles project had been designed as a 50-50 venture between Shell and Energy Transfer.
Shell got involved in the project in 2016 with its merger with the BG Group plc.
The $11 billion project is designed to produce about 16.45 million tonnes per year, running three trains.
Last September, Energy Transfer asked the Federal Energy Regulatory Commission for a five-year extension on the Lake Charles project.
The project, which is fully permitted, has been delayed by complex international contract negotiations, Energy Transfer has said. Construction could take up to four years, officials said.
The plan is to convert Energy Transfer’s existing LNG import facility into an export facility.
This post appeared first on Kallanish Energy News.