Liquefied Natural Gas Limited (LNGL) has agreed to increase the price of an earlier awarded engineering, procurement, and construction contract (EPC Contract) to the KBR‐SK Engineering & Construction (SKE&C) joint venture (KSJV) for the Magnolia LNG project in the US to $4.623bn (£3.62bn).
Why the EPC contract for the Magnolia LNG project has been revised
Originally, the EPC contract awarded to KSJV in November 2015 for the liquefied natural gas (LNG) facility to be built at the Port of Lake Charles in Louisiana was $4.354bn (£3.41bn).
The updated contract price is based on the installed capacity of the Magnolia LNG project moving up to 8.8 million tonnes per annum (mtpa) with the installed capacity EPC cost/tonne price being $525 (£411.25).
Initially, the mid-scale LNG export project was to have a capacity of 8mtpa produced by four LNG trains. Now each of the LNG trains of the project will have an increased capacity of 2.2mtpa.
According to LNGL, the updated agreement it has made with KSJV reflects the full scope of the original EPC contract, which has been modified for updated subcontractor pricing, costs pertaining to increasing liquefaction capacity of the Magnolia LNG project. The amended agreement also covers additional scope of work to be executed by the KSJV that were previously the responsibility of LNGL.
The ASX-listed LNGL said that the updated agreement is valid until 31 December 2019 and incorporates the 0.8mtpa capacity uplift for the LNG project, which is being reviewed for a total installed capacity of 8.8mtpa by the US Federal Energy Regulatory Commission (FERC).
LNGL managing director and CEO Greg Vesey said: “This agreement maintains the certainty of cost and capability with a world-class EPC provider. I wish to thank the LNGL, KBR and SKE&C teams for their efforts to complete this agreement and provide Magnolia with the most competitive, realistic, and transparent EPC contract in the industry.”
The Magnolia LNG project will also have two 160,000m3 full containment LNG storage tanks, LNG marine and ship loading facilities, and associated infrastructure.
LNGL expects to take a final investment decision and initiate construction on the LNG facility after executing adequate offtake agreements to support the project’s financing.
