- LNG, Magnolia and Delta Offshore Energy will extend their agreement until July next year
- The partnership includes LNG supplying gas of the same name to Delta’s power plant in Vietnam
- The companies have said they need more time to negotiate terms and conditions for a sale and purchase agreement
- Once settled, this will be the first long term agreement for LNG to Vietnam
- LNG’s share price is unchanged, with shares trading at 22.5 cents apiece
LNG and its project subsidiary Magnolia LNG, have come to an agreement with Delta Offshore Energy to extend their agreement until July 1 2020.
The parties have also agreed to negotiate terms and conditions of a definitive binding sale and purchase agreement (SPA) by May 31 2020.
On September 16, LNG and Delta came to an agreement whereby LNG would, through Magnolia, supply two million tonnes of liquefied natural gas to the Bac Lieu province in Vietnam.
Under this supply agreement, Delta would construct and operate an LNG-to-power project, comprising a 3200-megawatt combined cycle power plant.
The term of the supply agreement between Magnolia and Delta is for at least 20 years and a commercial start date is targeted for June 1 2024.
Delta first signed a memorandum of understanding on July 2018 with the Bac Lieu Province People’s Committee to develop and operate the 3.2 gigawatt onshore power plant and supporting facilities.
The supporting facilities include a floating LNG receiver, storage, re-gasification terminal, and pipeline.
A condition of this initial agreement, requiring “financial close”, has been amended. Instead, it will be conditional if the company makes a “financial investment decision by August 31 2020, in relation to its Magnolia Project.
The financial investment decision depends on Magnolia securing sufficient off-take agreements to support financing.
“We feel that the extensions will provide LNGL and Delta Offshore Energy with more than adequate time to finalise terms for what will be the first long-term sale and purchase agreement for LNG to Vietnam,” LNG Managing Director and CEO Greg Vesey said.
Execution of the SPA will take place once the terms are finalised and Delta has obtained government and regulatory approvals for the project.
LNG’s share price is unchanged, with shares trading at 22.5 cents apiece in a $129.5 million market cap.