Magnolia LNG’s supply deal with Vietnam moves forward

(Courtesy Magnolia LNG)

A liquefied natural gas supply deal between the proposed Magnolia LNG export terminal in Louisiana and the Vietnamese government has taken a significant step forward.

Vietnam’s decision to replace its plans for a coal-fired power plant with a 3,200-megawatt LNG-to-power project lays the groundwork for a purchase agreement of 2 million tonnes per year of U.S. liquefied natural gas from Louisiana’s Magnolia LNG.

In an announcement last week, the company thanked Prime Minister Nguyn Xuan Phuc for the recent approval of the amendments to Vietnam’s Power Development Plan 7, calling for the LNG project.

The approval clears the path for DeltaOE to negotiate and finalize a 25-year power purchase agreement with EVN to underpin its LNG-to-power project in Vietnam’s Bac Lieu Province, and concurrently, empowers LNGL and DeltaOE to finalize a binding sale and purchase agreement for delivery of 2 million tonnes per annum of U.S. liquefied natural gas from Magnolia LNG, pursuant to the parties’ nonbinding memorandum of understanding (MOU).

“As we have previously disclosed, the approval of the amendments to Vietnam’s Power Development Plan 7 was the prerequisite for execution of our binding sales and purchase agreement with our partners, Delta Offshore Energy, for 2 mtpa from Magnolia,” LNG Limited CEO Greg Vesey. “We will immediately begin completing the terms of what will be the first long-term sale and purchase agreement for LNG to Vietnam.”

Magnolia LNG LLC is developing an 8 mtpa or greater LNG export terminal in Lake Charles. The project site is on 115 acres adjacent to the Calcasieu Ship Channel. The project plan includes development of four LNG production trains of 2 mtpa each.

Feed gas supply will come from the Gulf Coast gas market via several gas suppliers. Gas supply will be delivered to the site via the Kinder Morgan Louisiana Pipeline. Magnolia LNG has entered into a Precedent Agreement for 20-year binding pipeline capacity agreement with Kinder Morgan Louisiana Pipeline LLC to deliver gas to the site for the full 8 mtpa of the project.

In 2016, the Federal Energy Regulatory Commission authored the project to site, construct, and operate facilities necessary to liquefy natural gas at the proposed site. Later that same year, FERC issued its order authorizing Magnolia LNG to export liquefied natural gas from the proposed facility to non-free trade agreement countries.