Magnolia LNG 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).
Advanced negotiations are ongoing with two parties for offtake of about 4Mtpa of LNG once the third parties sign their customer agreements and/or receive required Board approvals after 31st March 2015.
Magnolia LNG is confident it will close bankable offtake agreements for the full 8Mtpa of capacity.
The company has also progressed the U.S. Federal Environmental Regulatory Commission (FERC) approval progress while contractors KBR and SKEC have formed a joint venture to undertake the Engineering, Procurement and Construction contract.
Early works will begin in the second half of 2015 with site work expected to begin in early 2016.
"I am pleased with the solid progress by Magnolia LNG and the contribution being made by management and recently appointed staff," managing director Maurice Brand said.
"In order to assist Magnolia LNG management to ensure the above timetable is realised and Magnolia achieves financial close in 2015, I will be relocating to Houston at the end of April 2015.
"This will also enable me to work more closely with the Houston-based company CFO, Michael Mott on various corporate matters including the proposed dual share listing on ASX and NYSE, as well as with the Bear Head project team to achieve financial close for that project in 2016."
Market demand is strong for Magnolia LNG's offtake with four non-binding LNG tolling agreement (LTA) term sheets in place for a total of about 7Mtpa.
In addition, two parties with combined demand of about 1.7Mtpa are negotiating LNG sales and purchase agreements while 3.7Mtpa of draft LTAs are in "mark‐up stage" with three other parties.
Four other parties, representing about 6Mtpa of demand are in early stage contract discussions for SPAs or LTAs.
FERC Approval Process
The FERC is currently preparing the draft environmental impact statements for the Magnolia LNG project in Louisiana.
Once completed, this will be subject to a 45-day comment period before a final EIS is completed.
Findings in the final EIS will be used by FERC to decide on whether or not to approve the project.
MLNG has also delivered timely responses to FERC's data Request for Resource Report 9 on 27th February 2015..
It will also deliver a response to an engineering data request on 20th March 2015.
Engineering, Procurement and Construction Contract
Negotiations for a bankable EPC contract between MLNG and the KBR/SKEC joint venture are underway with terms to be disclosed upon conclusion of these negotiations.
However, MLNG does not expect any material changes to terms previously agreed with SKEC prior to the formation of the JV.
The EPC JV should complete all pre-EPC contract activities in the second quarter with a resulting lump sum fixed price EPC contact agreed thereafter.
This contract will have a fixed price validity period of six months during which time the MLNG Project will complete its project financing.
Commencement of an "Early Works" program in the second half of 2015, comprising initial detailed engineering and ordering of critical long‐lead equipment items, accelerates site work schedule following receipt of the Notice to Proceed from FERC.
The Early Works program coupled with commencement of site work in early 2016 enables forecasted first LNG production in late 2018.
Liquefied Natural Gas Limited's Magnolia LNG project remains on track for financial close this year and first LNG in 2018.
The project is transitioning into the EPC project phase this year with advanced negotiations ongoing with two parties for offtake of about 4Mtpa of LNG.
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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