Magnolia LNG Signs TS Agreement with SKEC Group

Magnolia LNG has executed a technical services agreement with SK E&C USA, a wholly owned subsidiary of SK Engineering and Construction, of Korea (SKEC Group).

The TS Agreement relates to the ongoing engineering, procurement and construction activities for MLNG’s planned 8 million tonne per annum Magnolia LNG Project, in Lake Charles, Louisiana, United States.

Under the TS Agreement the SKEC Group will, among other things:

• Continue to review all the pre‐front end engineering design information and data included in the preliminary Resource Reports submitted to the Federal Energy Regulatory Commission;
• Assist MLNG to complete the final Resource Reports as part of MLNG’s filing application to FERC, which is targeted for submission by the end of April 2014;
• Complete the FEED for the Magnolia LNG Project including gas pre‐treatment facilities, 4 LNG trains (each with nominal LNG production capacity of 2 mtpa), 2 x 160,000m3 full containment storage tanks, jetty and ship loader facilities and all related infrastructure and services. Refer to the attached Magnolia LNG Project layout;
• Prepare a detailed lump sum turn‐key (LSTK) EPC cost estimate on an open book basis by 28 November 2014;
• Negotiate and agree with MLNG a detailed LSTK EPC Contract “Term Sheet”, which is targeted for completion by 30 June 2014;
• Negotiate and agree a definitive and binding LSTK EPC Contract based on the Term Sheet;

The SKEC Group has for some time been progressing several of the activities under a shorter term Letter of Engagement, which is now superseded by the TS Agreement.

SKEC Group has already completed a satisfactory detailed review of the OSMR® process technology, which will be employed in the Magnolia LNG Project.

The company’s managing director, Maurice Brand, said that the EPC activities remained on schedule with the SKEC Group and will be managed going forward by the recently appointed Chief Operating Officer, John Baguley, who will commence on the 1 May 2014.

“We also remain on schedule to lodge our application for Filing with the Federal Energy Regulatory Commissions (FERC) on the 30 April 2014,” said Brand.