LNGL Adjusts Vietnamese MOU

Liquefied Natural Gas Limited (LNGL), which is developing the 8.8mn mt/yr Magnolia LNG project in Louisiana, said October 11 it has agreed to extend the validity date of its non-binding term sheet with Delta Offshore Energy of Vietnam to July 1, 2020 from October 31, 2019.

The term sheet, in the form of a memorandum of understanding (MOU), was originally agreed mid-September, and was largely predicated on LNGL reaching a financial close on Magnolia LNG by the end of this year. Financial close would be dependent on Magnolia securing sufficient offtake agreements to support financing and on LNGL, in turn, making a final investment decision (FID) on the Magnolia project.

In the amended MOU and term sheet, the condition precedent for financial close by December 31, 2019 has been removed and the only condition precedent remaining is for LNGL taking FID by August 31, 2020.

Both parties also agreed to use reasonable efforts to finalise a definitive and binding sale and purchase agreement (SPA) for 2mn mt/yr of LNG from Magnolia by May 31, 2020.

“We feel that the extensions will provide LNGL and Delta Offshore Energy with more than adequate time to finalise terms for what will be the first long-term sale and purchase agreement for LNG to Vietnam,” LNGL CEO Greg Vesey said.

Other components of the term sheet – a 20-year term, FOB, and pricing based on a fixed liquefaction fee of 113% of Henry Hub plus monthly fixed fees for LNG lifting – remain unchanged. LNG lifted by Delta Offshore Energy would help fuel a planned 3,200-MW combined cycle power plant in Vietnam’s Bac Lieu Province, expected on-line in 2023.