Chevron Corporation’s (CVX Quick QuoteCVX - Free Report) 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 Quick QuoteET - Free Report) , 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 LNG

With 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 Hub

The 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 Portfolio

This 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 Decision

As 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 Diversity

Chevron’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 Advantages

The 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 Growth

Energy 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 Agreements

Chevron’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 Energy

The 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 Picks

CVX 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 Quick QuoteSUBCY - Free Report) , which sports a Zacks Rank #1 (Strong Buy), and Oceaneering International (OII Quick QuoteOII - Free Report) , holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.