Liquefied Natural Gas Limited (ASX:LNG; OTCMKTS:LNGLF) has executed an Engineering, Procurement & Construction (NYSE:EPC) Contract Term Sheet with SK Engineering and Construction (SK E&C) for the Magnolia LNG project in Louisiana.
This will help in the early drafting of the lump sum turnkey EPC Contract and shorten the negotiation and completion period.
Front End Engineering and Design work by SK E&C is also progressing on schedule and budget while the supplier and subcontractor inquiry process to support EPC capital cost estimate is underway.
"LSTK EPC Contracts are very detailed and comprehensive contracts and their negotiation can be extremely protracted," Magnolia LNG chief operating officer John Baguley said.
"The EPC Term Sheet will materially assist in the early drafting of the LSTK EPC Contract and pave the way for a much shorter negotiation and completion period.
"SK E&C is continuing to progress the FEED and build‐up of the LSTK EPC Contract price under a separate Technical Service Agreement signed in April 2014, and at this stage the program is on schedule and within budget."
SK E&C has already estimated capital costs for an initial two train project at US$1.57 billion.
MLNG is planned as a 8Mtpa liquefied natural gas export project comprising of four liquefaction trains located at the port of Lake Charles, Louisiana.
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.
A final investment decision will be made in late 2014.
Separately, the company continues to build up the team for Magnolia LNG with the appointment of Greg Pilkinton as its EPC contracts manager.
Other positions to be filled shortly include the appointment of an EPC planning director; vice president engineering and construction, and senior vice president facilities operations.
"These additional personnel will round out MLNG's core engineering, construction and operations team, to enable us to keep pace with the SK E&C work outflow and maintain adherence to the current target to achieve a Financial Close in mid‐2015," Baguley added.
EPC Term Sheet
The EPC Term Sheet details the generally agreed position of SK E&C and MLNG in relation to over
45 key commercial provisions to be further developed and included in a Lump Sum Turn Key
(NYSEARCA:LSTK) EPC Contract.
BNP Paribas, MLNG's project finance adviser and Merlin Advisors LLC, the lenders' technical consultant, contributed to the establishment of the EPC Term Sheet to assist in ensuring bankability of the provisions.
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