Magnolia LNG awards $4.35bn contract for MLNG project in US

Liquefied Natural Gas subsidiary Magnolia LNG has awarded a $4.35bn worth engineering, procurement and construction contract (EPC Contract) to the KBR-SKE&C joint venture (KSJV) for the Magnolia LNG project (MLNG) in US.

Under the terms of the contract, KSJV will provide engineering, procurement and construction services for four LNG production trains which have a design capacity of two million tons per annum (mtpa) or greater each, two 160,000m³ full containment storage tanks.

According to Liquefied Natural Gas, the contract will also cover LNG marine and ship loading facilities, supporting infrastructure and all required post-FID approvals and licences.

The LNG facility, which is being developed across 115 acres of land at the Port of Lake Charles, is expected to have a production capacity of eight mtpa of the liquefied fuel.

Liquefied Natural Gas managing director and chief executive officer Maurice Brand said: "The total EPC capital cost in the range of $495 to $544 per tonne of LNG plant capacity (for the 8 mtpa or greater plant) establishes a new low for US Gulf Coast projects and is substantially lower compared with recent LNG projects around the world."

"With execution of the EPC contract in hand, we shall continue with final engineering activities but will not commit to outsized, noncancellable commitments in advance of execution of off-take agreements for at least 4 mtpa of additional sales."

In August, MLNG selected the Siemens Energy process compression and driver equipment to achieve higher final plant design capacity.

KSJV estimated the take out cost for one train to be at $630m.

The revenue sharing arrangement is associated with KSJV’s support of the initial scaled commercialisation of LNGL’s OSMR technology and construction approach and is expected to be about $0.50/mmBtu when combined with operating and other costs across the plant.

Separately, the Federal Energy Regulatory Commission (FERC) has prepared a final environmental impact statement (EIS) for the Magnolia LNG project and concluded that construction and operation of the project would result in adverse environmental impacts.