(MENAFN- ProactiveInvestors)
( OTC ADR: LNGLY) has hit a new milestone with KBR and SKEC finalising the Engineering Procurement and Construction joint venture agreement for the Magnolia LNG project.
The agreement calls for KBR to provide a project director and for SKEC to provide the deputy project director for the 70/30 joint venture that will deliver the 8 million tonne per annum LNG project.
A three member executive committee will be formed to provide oversight to the EPC execution team under the management of the project directors.
“This signing of the joint venture agreement formalises the EPC Contractor arrangement for Magnolia LNG that was established under the MOU originally signed between MLNG KBR and SK E&C USA in December 2014” managing director Maurice Brand.
“The JVA encompasses the full four-train 8Mtpa planned capacity of the MLNG facility and supports our planned transition into the EPC project phase in 2015.”
Magnolia LNG remains on schedule for Financial Close in mid-2015 and first LNG in the fourth quarter of 2018.
Magnolia LNG
Magnolia LNG located along the Calcasieu River near Lake Charles is planned as a 8 million tonne per annum (Mtpa) liquefied natural gas export project comprising of four liquefaction trains each capable of producing up to 2Mtpa of LNG (1.7Mtpa firm).
This will use LNG Limited’s OSMR® LNG process technology with the company adopting a tolling business model whereby Magnolia LNG will provide liquefaction storage and ship loading facilities to LNG buyers who pay a monthly fixed capacity fee plus all LNG plant operating and maintenance costs.
The LNG buyers are also responsible for the supply and transportation of gas to the project site.
LNG Limited has tolling agreements covering 7Mtpa of the project’s planned 8Mtpa capacity and is currently focused on converting the first 4Mtpa to binding status in the first half of 2014.
The U.S. Federal Energy Regulatory Commission has formally accepted its filling application for Magnolia LNG with all approvals expected during 2015 in time for financial close in the middle of the same year.
The 117 acre site has minimal marine investment and is well positioned to provide LNG ship access.
MLNG previously entered into a 20 year legally binding pipeline capacity agreement with Kinder Morgan Louisiana Pipeline LLC (KMLP) to deliver gas to site for the full 8Mtpa of the project through its existing and underutilised pipeline on site.
The initial $1.986 billion lump sum turnkey contract covers the initial 4Mtpa LNG installation comprising:
- Two LNG trains each with a LNG design capacity of 2Mtpa;
- Two 160000 square metre storage tanks;
- A jetty and ship loading facility and related infrastructure; and
- All required approvals and licenses for the full 8Mtpa project.
The contract price includes a lump sum fixed price of US$1.391 billion valid through 30 June 2015 and a provisional sum of US$595 million representing 30% of contract value.
Total capital costs are estimated at US$3.5 billion or US$440 per tonne for the 8Mtpa project.
Analysis
’s Magnolia LNG project has reached a new milestone with KBR and SKEC signing an Engineering Procurement and Construction joint venture agreement.
The project is transitioning into the EPC project phase this year and remains on schedule for Financial Close in mid-2015.
LNG Ltd remains well funded with a cash balance of $53.2 million and no debt as at 31st December 2014.
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