Australian-listed LNG Ltd, developer of the Magnolia LNG project in Louisiana, is striving to sign a full sales and purchase agreement (SPA) with Delta Offshore Energy. The first LNG cargo could set sail to the Mekong Delta in May, or early June 2020, for use in an integrated 3.2 GW combined-cycle power plant.
The two companies in September signed a non-binding accord to supply the Bac Lieu floating LNG storage and regasification unit (FSRU) and now agreed to extend the validity date of this accord until July 1, 2020. Magnolia LNG and Delta now said they would use “reasonable efforts” to agree the terms of a binding sale and purchase agreement (SPA) by May 31.
Once a full Magnolia-Delta SPA is signed, the Louisiana shipments to Vietnam will be on a free-on-board (FOB) basis for a 20-year term with options to extend the term.
Singapore-based Delta is working with the Bac Lieu Province People’s Committee to develop and operate of a 2 mtpa floating regas unit and an integrated 3.2 GW onshore power station.
FID on Magnolia LNG envisaged in August
LNG Ltd for its part is striving to take a financial investment decision (FID) to build the Magnolia liquefaction project by August 31, 2020. Commercial start-up is meant to take place in June 1, 2024, which could be adjusted by up to seven months.
“We feel that the extensions will provide LNGL and Delta Offshore with more than adequate time to finalize terms for what will be the first long-term sale and purchase agreement for LNG to Vietnam,” said Greg Vesey, managing director of LNG Ltd.
Delta Offshore Energy’s director of engineering, Bobby Quintos, pointed out the company’s alliance with LNG Ltd will give Vietnamese buyers access to Henry Hub-index gas supply.
Novatek develops rival regas terminal
Though the Bac Lieu project will help Vietnam source LNG as a feedstock for power, the Asian nation is not solely counting on US gas supply. The government also supports an alternative LNG regas terminal, proposed by Russia’s independent gas company Novatek.
A second LNG import terminal and adjacent gas power station is under development in Ninh Thuan province, just south of Cam Ranh Bay. That venture is backed by Novatek, the owner and developer of two Russian Arctic region LNG export plants, the existing Yamal LNG plant in northern Siberia and the Arctic LNG II project.