Xinhua News Agency Article on Magnolia LNG from the Shanghai Petroleum and Gas Exchange

"Magnolia" is open! Looking for buyers in the Magnolia LNG project in the US, with an estimated annual production of 8.8 million tons

LNG limited's “Magnolia LNG” project in Louisiana, USA, is looking for potential buyers and hopes to promote the early realization of FID and make the project progress to the construction stage.

Magnolia LNG project ready to go

LNG Limited is a developer of an LNG liquefaction export project currently listed in Australia. The company's wholly-owned "Magnolia LNG" project (hereinafter referred to as the MLNG project) will be constructed on the canal channel of the Charles Lake Port in Louisiana, USA. It is expected to have an annual output of 8.8 million tons and consist of four liquefaction production lines.

Magnolia's Chinese meaning magnolia, named after the state flower of Louisiana. Magnolia LNG has unique advantages in project location, EPC cost, government approval, equity financing and pricing. It is a complete and mature LNG sales agreement. You can start work later.

The project is located in southwestern Louisiana, on the Gulf Coast, 13 miles south of Lake Charles, close to the Calcasieu Deepwater Industrial Canal, which has been in the safe and secure shipping history of LNG for 40 years, and the ready-to-go transshipment bay. At an altitude of 30 feet above sea level (more than 9 meters), it is significantly higher than the local storm surge height and enjoys natural flood protection, so there is no need to raise any mines or build flood control embankments. The site is 22 nautical miles (about 41 km) from the Gulf Coast, which is sufficient to reduce the impact of seasonal storms on the site.

According to reports, MLNG is a rare project in the US green space project, no need to build new pipelines, and there is no uncertainty in the pipeline. There is a ready-made gas pipeline, the Kinder Morgan Louisiana Pipeline (KMLP), which traverses the southern boundary of the plant and can bring together a number of major gas transmission lines from the upstream from major US gas producing areas (including Marcellus, Haynesville, Perryville, SCOOP). And the gas source purchased by shale gas production areas such as STACK to meet all the gas transmission needs of the project. MLNG has signed a 20-year interconnection agreement and management agreement with KMLP.

MLNG enjoys the proven infrastructure provided by the existing industrial area of ​​Lake Charles Harbour. It is only 1.3 miles from the existing substation of the local power company Entergy, eliminating the need for a new power station. The production area enjoys ready-made water supply, good access to the factory roads, and a range of other existing infrastructure. The local community also has quality construction operators, experienced construction subcontractors, and various industrial services.

Thanks to LNG Limited's wholly-owned OSMR® patented liquefaction technology and compact modular design, the MLNG footprint is smaller than comparable projects. Coupled with the advantages of innate conditions in the plant area, there are few preparations required for construction, which can reduce construction costs.

It is reported that the MLNG project has obtained all the approvals of relevant government regulatory approvals, and holds the global export license issued by the US Department of Energy to export all production capacity to the FTA countries and non-free trade zone countries (Non-FTA) and all Relevant approvals required for construction (US Coast Guard, US Army Corps of Engineers, air emission permits, water permits, etc.).

From the summary report on the progress of the Australian LNG company, it can be seen that the MLNG Lump Sum Turn Key has completely signed the EPC contract. The general contractor is a joint venture company KSJV, which is 70% owned by KBR in the United States and 30% owned by SK E&C in South Korea. The full contract price has been locked in the contract, and the EPC cost per ton capacity is about $500, which is very competitive in the US greenfield project.

The MLNG project is very mature in design, has selected major subcontractors and suppliers, and has ordered major equipment in advance. The detailed EPC implementation plan for more than 6,000 projects has been completed. Compared to some of the large production lines currently under construction that require special equipment, Magnolia LNG benefits from a medium-sized design that can be competitively priced with standard equipment and competitive bidding by multiple equipment suppliers. The project adopts modular design. Each production line consists of 5 modules, which can be used to maximize the use of modular prefabrication yards, and then shipped to the site for assembly, thereby reducing construction costs and improving construction progress. The EPC general contractor has initially selected Chinese companies as subcontractors to build modules.

Looking for partners

According to reports, MLNG has signed an investment commitment contract with New York's infrastructure private equity fund Stonepeak for a total of approximately $1.5 billion in equity. If the buyer of a strategic long-term agreement has the willingness to invest, part of the participation rights of the project equity can be obtained.

Currently, China Private Equity Fund IDG Energy is the second largest shareholder of LNG Limited's listed shares. IDG is the first and only Chinese investor to invest directly in US LNG projects. IDG selected MLNG as its investment objective and also reflected the unique advantages of the MLNG project.

The MLNG project hopes to sell LNG in the FOB Sales and Purchase Agreement (SPA), providing customers with a win-win business model. In terms of the structure of the acquisition contract, it will adapt to customer requirements and provide flexibility.

MLNG's pricing is competitive thanks to lower construction costs and the operating cost advantages of OSMR® patented technology. Moreover, MLNG's quotation for long-term agreements is based on the total price of the full-price turnkey contract, which is deterministic and financing. In addition, MLNG's business model is a pure service model that provides all LNG production unreservedly to customers, rather than competing with customers as the usual developers in the market keep extra cargo as self-operated.

Insiders said that MLNG will cooperate with potential buyers to promote the early realization of FID, make the project progress to the construction stage quickly, and provide buyers with reliable LNG supply as soon as possible.

Source: Shanghai Oil and Gas Trading Center

Author: Dan

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