Liquefied Natural Gas Ltd inks LNG supply deal in Vietnam

Liquefied Natural Gas ASX LNG Delta Offshore Energy Magnolia Vietnam energy supply
Liquefied Natural Gas Ltd has struck a deal with Delta Offshore Energy to supply LNG from its Magnolia LNG export terminal in the US to the Bac Lieu power project in Vietnam.

Liquefied Natural Gas Ltd (ASX: LNG) has clinched a deal with Delta Offshore Energy to supply LNG to the Singaporean private company’s Bac Lieu power project in Vietnam.

In an announcement today, LNG Ltd said its wholly-owned subsidiary Magnolia LNG LLC would deliver 2 million tonnes per annum of LNG from its US-based project to Delta pursuant to a supply and purchase agreement on a free-on-board basis for a 20-year term with options for extension.

In turn, Delta will deliver the gas to its Vietnamese power plant, generate electricity and sell its output to the Bac Lieu province according to a power purchase agreement.

Specific terms and conditions have been negotiated in term sheet form for both of the agreements, which are linked on a back-to-back basis to provide an integrated LNG-to-power solution for the province.

According to LNG Ltd, contracting parties are currently completing the agreement contracts for execution, with routine conditions precedent applying in both contract documents.

Bac Lieu LNG-to-power project

In July 2018, Delta signed a memorandum of understanding with the Bac Lieu province’s People’s Committee for the development and operation of an integrated LNG-to-power project in southern Vietnam.

The project includes the construction and operation of a 3.2-gigawatt combined-cycle onshore power plant, a floating LNG receiving, storage and regasification import terminal and a pipeline to deliver power generation to the province.

Pending finalisation of government approvals, the project is expected to start operations in 2023.

Magnolia LNG project

Magnolia is proposing to develop an 8Mtpa or greater LNG export terminal in the Port of Lake Charles in Louisiana, US.

Using LNG Ltd’s patented Optimised Single Mixed Refrigerant (OSMR) LNG process technology, the company aims to construct and operate up to four liquefaction production trains, each with a capacity of 2.2Mtpa or greater.

Construction and operation includes two 160,000m3 full containment storage tanks, ship, barge and truck loading facilities and supporting infrastructure.

According to LNG Ltd, a final investment decision and the start of construction is expected upon the execution of sufficient offtake deals to support financing.

LNG Ltd chief executive officer and managing director Grey Vesey said the Delta deal was a “major achievement for the Magnolia LNG project” as the company progresses toward a final investment decision.

“This agreement represents a significant advancement of our long relationships held with DeltaOE, the province, and Vietnamese leadership, including our earlier hosting of the province leadership and DeltaOE at the Magnolia site,” he said.

Delta engineering managing director Bobby Quintos said the Bac Lieu project “addresses Vietnam’s need for an LNG import terminal to provide access to growing the LNG industry as a feedstock for electricity generation”.

“Our alliance with LNG Ltd will allow the Government of Vietnam to have a stronger relationship with the US market and the long-term stability of the Henry Hub Index, which fits perfectly with the Vietnamese National Power Development Plan,” he added.

By midday trade, LNG Ltd shares were up 22.45% to $0.30.

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