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Liquefied Natural Gas: Project Lender BNP Paribas Appoints Merlin As Engineer

Liquefied Natural Gas (ASX: LNG) continues to mark progress of its 8 million tonne per annum Magnolia LNG project in Louisiana with project lender BNP Paribas appointing Merlin Advisors LLC as their Engineer.

This will enable the company to work with BNP Paribas (the project's financial adviser and lead debt arranger) and Merlin to identify and address any issues in the early stages.

In the Second phase of work, Merlin, which has been involved in the majority of the world's major LNG projects as an adviser, will develop the key Bankability Due Diligence Report that will be issued to prospective project debt financiers.

LNG Limited had recently filed the formal application for Magnolia LNG project with the U.S. Federal Energy Regulatory Commission.

"Merlin brings a wealth of LNG and energy industry experience to the project," LNG chief financial officer Norman Marshall said.

"While Merlin will be working specifically on behalf of the Project lenders, both Phase 1 and Phase 2 will be very interactive processes, between BNP Paribas, Merlin and the Company, to assist the company ensure the project remains bankable.

"We are now working closely with BNP Paribas on the engagement of the lenders' legal counsel, which will also be a critical role to assist ensure all material Project contracts and agreements comply with international project financing requirements"

LNG is targeting a Final Investment Decision in late 2014 and Financial Close in mid‐2015.

Scope of Work

Merlin's scope of work will comprise two key phases.

In the first phase, it will review the current status of the project, including the site, front end engineering design, material contract terms and development plans and schedule, to identify any issues which could potentially impact project delivery.

It will also carry out an ongoing review of the project development to provide early identification of any potential bankability and project financing issues.

Phase 1 is a critical process as it will enable the company to work with BNP Paribas and Merlin to identify and address any potential issues, including those with financing implications, early in the Project development process.

In Phase 2, Merlin will carry out a detailed Bankability Due Diligence Report, which will be a key document in relation to the company's Final Detailed Project Feasibility Study and the Project Information Memorandum to be issued to prospective project debt financiers, including major international banks and Export Credit Agencies.

Merlin

Merlin is a seasoned advisor to the liquefied natural gas and process industries that was formed through the merger of Merlin Associates into the Poten & Partners' engineering and technical due diligence group.

It has experience across all facets of the LNG business, from technical and shipping through to market and commercial as well as the process industries including gas processing facilities, gas pipelines, LPG production, oil production, fertilizer production, petrochemicals and power generation.

Merlin has been involved in the majority of the world's major LNG projects as an advisor to lenders, project developers, investors and LNG buyers.

Its parent company, Poten & Partners, is also prominent across lender shipping and commercial/marketing advisory.

Analysis

This appointment is critical in terms of progressing the Project to the next level, as it will enable the company to work with the Project's financial adviser and lead debt arranger BNP Paribas and Merlin to identify and address any issues in the early stages.

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