Chevron & Energy Transfer Announce 20-Year LNG Supply Agreement

Chevron Corporation’s CVX subsidiary, Chevron U.S.A. Inc., has significantly strengthened its position in the global liquefied natural gas (“LNG”) market by executing an incremental Sale and Purchase Agreement (“SPA”) with Energy Transfer LNG Export, LLC, a subsidiary of Energy Transfer LP ET, Dallas, TX-based oil and gas storage and transportation company. This newly signed agreement secures an additional 1 million tons per year (tpy) of LNG over 20 years. The LNG will be sourced from the Lake Charles LNG export facility in Louisiana, further enhancing the Houston, TX-based integrated oil and gas company’s long-term strategic supply portfolio.Chevron Now Secures 3 Million tpy From Lake Charles LNGWith the addition of this latest contract, Chevron's total contracted volume from ET’s subsidiary now stands at 3 million tpy. This comes after the initial agreement for 2 million tpy, signed in December 2024. The newly added volume reinforces Chevron’s commitment to long-term LNG sourcing from the U.S. Gulf Coast and highlights the importance of reliable infrastructure in meeting global energy demand.The agreement retains the same terms as the initial SPA, based on a free-on-board (“FOB”) delivery model. It includes a fixed liquefaction fee and a gas supply component indexed to the Henry Hub benchmark, ensuring competitive pricing and long-term flexibility in global LNG markets.Lake Charles LNG as a Premier Export HubThe Lake Charles LNG project is uniquely positioned to become a leading U.S. export facility due to its strategic use of an existing brownfield regasification site. This allows the project to capitalize on pre-existing infrastructure and accelerate development timelines. The facility will utilize existing LNG storage capacity, marine berths and handling systems, significantly reducing the capital intensity typically associated with greenfield projects. Its integration with Energy Transfer’s Trunkline pipeline system provides direct access to prolific natural gas basins, ensuring a steady and economical gas supply. This strategic advantage enhances the project’s appeal to long-term buyers seeking security and scalability.Energy Transfer Strengthens Global LNG PortfolioThis expanded SPA with Chevron’s subsidiary represents another milestone in Energy Transfer’s robust push into the global LNG market. The company has already secured notable commercial agreements in recent months, including a head of agreement with MidOcean Energy for approximately 5 million tpy, and a Sale and Purchase Agreement with Kyushu Electric Power Company for 1 million tpy.These agreements highlight Energy Transfer's ability to secure firm long-term commitments, reflecting high market confidence in the Lake Charles LNG facility. The cumulative effect is a rapidly maturing LNG portfolio that places Energy Transfer among the emerging leaders in U.S. LNG exports.Contingency on Final Investment DecisionAs with most infrastructure projects of this magnitude, the SPA remains subject to a positive Final Investment Decision (“FID”) by Energy Transfer’s subsidiary. This decision will be pivotal, triggering the capital commitment necessary to proceed with construction. Additionally, the agreement includes other conditions precedent that must be satisfied before becoming fully effective. These standard clauses ensure risk mitigation for both parties while aligning project milestones with financial and operational readiness.Chevron’s LNG Strategy Anchored in Reliability and DiversityChevron’s expanded agreement with Energy Transfer signals more than just volume growth. This exemplifies the company’s wider LNG strategy focused on portfolio diversity, supply security and long-term flexibility. With access to major markets in Asia and Europe, Chevron leverages its global network to deliver LNG sourced from dependable, cost-efficient U.S. production basins. By locking in additional volumes through long-term contracts, Chevron strengthens its ability to meet growing customer demand while navigating the complex dynamics of the energy transition.Lake Charles LNG’s Competitive AdvantagesThe Lake Charles facility holds a number of competitive advantages that make it an attractive supply point for global LNG customers. Located on the U.S. Gulf Coast, it offers proximity to key export routes and the ability to tap into some of the most productive shale formations in North America, including the Haynesville, the Permian and the Marcellus. Its strategic location provides cost-effective transportation and consistent access to ample natural gas resources. Furthermore, the integration with Energy Transfer’s established pipeline infrastructure ensures operational reliability and scalability that other prospective export terminals may lack.Energy Transfer: A Midstream Powerhouse Driving U.S. LNG GrowthEnergy Transfer continues to establish itself as one of North America’s most critical midstream energy companies. Its footprint spans across every major U.S. production basin, with more than 120,000 miles of pipeline and an extensive network of storage and terminal facilities. This expansive infrastructure supports the company's LNG ambitions, enabling it to deliver on large-scale export commitments with high efficiency. The company’s experience in managing complex infrastructure positions it to become a cornerstone of the global LNG supply chain, particularly as demand continues to surge in both established and emerging markets.Global Demand Fuels Strategic LNG AgreementsChevron’s decision to increase its LNG offtake from the Lake Charles facility comes as global demand for liquefied natural gas reaches new heights. In Europe, the pivot away from Russia’s pipeline gas has created a massive need for stable alternative supplies. In Asia, countries like China, Japan and South Korea are investing heavily in LNG to reduce emissions while maintaining energy reliability.As a result, long-term LNG contracts are no longer viewed as optional, they are essential for future energy security. Chevron’s latest move reflects an understanding of this market reality and its intent to lead in providing reliable LNG to meet diverse customer needs worldwide.Conclusion: Long-Term LNG Supply Partnerships Redefining Global EnergyThe expanded Sale and Purchase Agreement between Chevron’s subsidiary and Energy Transfer’s subsidiary represents a transformative step in both companies’ LNG trajectories. With CVX’s subsidiary now securing 3 million tpy from the Lake Charles facility, it strengthens the role as a global energy provider with access to competitive U.S. LNG.For Energy Transfer, the SPA validates its infrastructure strategy and reinforces the role as a growing force in international LNG markets. Together, these energy giants are shaping the future of LNG supply by forging long-term partnerships that deliver certainty, scalability and resilience across the global energy value chain.CVX's Zacks Rank & Other Key PicksCVX and ET have a Zacks Rank #2 (Buy) each.Investors interested in the energy sector might look at some other top-ranked stocks like Subsea 7 SUBCY, which sports a Zacks Rank #1 (Strong Buy), and Oceaneering International OII, holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Subsea 7 is valued at $5.54 billion. The company is a global leader in delivering offshore projects and services for the energy industry, specializing in subsea engineering, construction and installation. Headquartered in Luxembourg, Subsea 7 supports both the oil & gas and renewable energy sectors with integrated solutions, including subsea infrastructure, heavy lifting and life-of-field services.Oceaneering International, valued at $2.05 billion, delivers engineered services, products and robotic solutions to the offshore energy, defense, aerospace, manufacturing and entertainment sectors globally. Its portfolio includes remotely operated vehicles, subsea hardware, pipeline inspection and repair, diving services, and digital technologies. The company operates across multiple segments and supports U.S. government defense and space initiatives.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chevron Corporation (CVX): Free Stock Analysis Report Oceaneering International, Inc. (OII): Free Stock Analysis Report Energy Transfer LP (ET): Free Stock Analysis Report Subsea 7 SA (SUBCY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks