Magnolia LNG signs 1.7 Mt/year tolling agreement (US)

Magnolia LNG, a liquefaction project developed by Liquefied Natural Gas Ltd has signed a tolling term sheet with LNG Holdings in relation to the Magnolia LNG Project, in Lake Charles, Louisiana, United States (MLNG Project). The Term Sheet is effective until 30 June 2014 and, under the provisions of the Term Sheet, the parties intend to now progress and enter into a definitive Tolling Agreement.

Under the proposed Tolling Agreement, LNG Holdings will be responsible for delivery of gas to the MLNG Project for liquefaction, storage, and delivery onto LNG ships arranged or designated by LNG Holdings. In consideration of Magnolia’s provision of the tolling services, LNG Holdings will pay to Magnolia a fixed monthly capacity fee, over the 20 year tolling term, and other fees in relation to the MLNG Project’s fixed and variable operating and maintenance costs. LNG Holdings and Höegh LNG will deliver LNG from the MLNG Project to both United States domestic and international markets via use of their planned Floating Storage and Regasification Unit (FSRU) network. Markets to be supplied, subject to the relevant DOE and other approvals, will include Höegh’s Port Dolphin project off Tampa in Florida and LNG Holding’s Port Ambrose project off Long Island, New York and the Port Meridian LNG import terminal in the UK, as well as other destinations compatible with Höegh’s FSRU vessels.

The MLNG Project comprises up to four gas liquefaction trains, each with a guaranteed capacity of 1.7 Mt/year and an estimated nameplate capacity of 2 Mt/year. Magnolia anticipates receiving final United States federal and state permitting in 2015, commencement of construction in 2015, and initial start‐up of operations in mid‐2018. Magnolia has already received approval from the US DOE to export 4 Mt/year of LNG to countries which have a Free-Trade Agreement with the United States. Magnolia has applied to increase the current approval by an additional 4 Mt/year and also approval to export 8 Mt/year of LNG to countries which do not have a Free Trade Agreement with the United States.