Magnolia LNG agrees EPC contrct with SK E&C Group
Magnolia LNG agrees EPC contrct with SK E&C Group
BRISBANE, Australia -- Magnolia LNG (MLNG), a wholly owned subsidiary of Liquefied Natural Gas Ltd. (LNGL), has agreed to an EPC contract with SK E&C USA in relation to the Magnolia LNG Project.
The contract covers the initial 4 mtpa LNG installation, comprising two LNG trains, each with a LNG design capacity of 2 mtpa, two 160,000 cu m storage tanks, a jetty and ship loading facility and related infrastructure, and all required approvals and licenses for the full 8 mtpa project.
An additional two 2 mtpa trains (Trains 3 & 4) are planned to follow the initial 4 mtpa installation.
The EPC contract, which is a lump sum turn key model, has now been forwarded to BNP Paribas, MLNG’s project finance adviser, Merlin Advisors, the lenders’ technical consultant, and legal advisors White and Case for final review.
The finance adviser review aims to ensure third party acceptability of all proposed EPC contract provisions to enable MLNG financial close consistent with project timelines. The EPC contract has also been forwarded to Stonepeak Partners, the proposed Magnolia LNG Project Equity partner, for their final review together with its advisers.
Execution of the EPC contract is planned for late December, subject to LNGL Board approval. The capital cost for the initial contracted work totals $1.986 billion for the two-train installation and associated facilities, and comprises two components:
- A lump sum, fixed price of $1.391 billion (70% of contract value) valid through 30 June 2015; and
- A provisional sum of $595 million representing 30% of contract value.
During the period to Mar. 31, 2015, LNGL and SK E&C will conduct further optimization and cost reductions. Any resultant cost reductions will be apportioned between the parties, but in any event, the lump sum component will not exceed the agreed fixed price of $1.391 billion.
