* Energy Transfer delays investment decision to 2021
* Shell relinquishes 50% stake amid spending cuts
* Decision comes after collapse in oil, gas prices
(Adds fresh quote, share prices)
By Ron Bousso, Shradha Singh and Scott DiSavino
March 30 (Reuters) - Royal Dutch Shell Plc pulled
out of a major U.S. liquefied natural gas (LNG) export plant
under development following the recent crash in energy prices,
quickly followed by its partner, Energy Transfer LP,
delaying its final decision on whether to go ahead with the
project to next year.
The Lake Charles, Louisiana, facility is one of several LNG
export projects worldwide that have been delayed in recent
months by the collapse in global energy prices. Global LNG
demand has been hitting record highs for years, thanks to big
demand from Asian nations like China and India as they diversify
away from dirtier coal power generation.
The crash in oil and gas prices has caused major LNG
exporters like Qatar and oil giant Exxon Mobil Corp,
however, to put off gigantic new facilities or expansions of
existing projects. U.S. gas prices have recently dropped to
their lowest since 1995.
"It's telling that (Shell) a major would walk away from a
major outlet for long-term gas supply," said Ira Joseph, head of
global gas and power analytics at S&P Global Platts, noting that
storage, port and pipeline work was already in place on the
project.
Analysts have anticipated that a number of the projects
under development worldwide would not come to fruition. In
total, U.S. energy firms alone are developing over 50 billion
cubic feet per day (bcfd) of new export capacity - more than all
the worldwide consumption of LNG in 2019, which was about 46.3
bcfd, according to Refinitiv Eikon data.
"Given the added demand decreases associated with COVID-19
and continuation of price declines it’s even more likely that
we’ll see additional projects aiming to reach FID (final
investment decision) this year delay their timelines for hitting
this milestone," said Allison Hurley, team lead, LNG and
proprietary natural gas at energy researcher Genscape.
The Lake Charles project, one of a number of large LNG
facilities planned in the wake of the U.S. shale boom, envisaged
converting Energy Transfer's existing import and regasification
facility into a 2.2-bcfd export facility.
"Whilst we continue to believe in the long-term viability
and advantages of the project, the time is not right for Shell
to invest," Maarten Wetselaar, head of Shell's integrated gas
and new energies division, said in a statement.
Energy Transfer said it expected to make a final investment
decision by early 2021 on whether to build the plant, a delay
from its earlier timeline for a decision by late 2020. The
company's shares fell by 5% on Monday, while Shell rose 4%.
Shell said last week that it would cut spending by $5
billion to below $20 billion in 2020 and suspended its vast $25
billion share buyback plan in an effort to weather the oil price
collapse.
Exxon Mobil is likely to delay the greenlighting of its $30
billion LNG project in Mozambique, six sources told Reuters in
March.
Qatar has also delayed choosing Western partners for the
world's largest LNG project by several months, four sources said
in February.
(Reporting by Scott DiSavino in New York and Shradha Singh in
Bengaluru; Editing by Lisa Shumaker, Marguerita Choy and Peter
Cooney)
