Vietnamese project tied to Louisiana LNG gets key approval

(Courtesy Magnolia LNG)

A proposed gas-to-power plant in Vietnam with connections to the Louisiana Magnolia LNG project is moving forward after securing an important regulatory approval, S&P Global Platts reports.

The Delta Offshore Energy plant is tied to a preliminary offtake agreement with Magnolia LNG project. A statement from its backers, LNG Limited, indicate startup and completion may be later than previously expected, although LNG Limited tells S&P Global Platts it is sticking to its most-recent anticipated schedule for a final investment decision and first gas at Magnolia.

Magnolia is among a handful of second-wave US liquefaction projects that has struggled to secure sufficient long-term contracts from buyers of the LNG it plans to produce that would give it the support it needs to finance construction. The recent US-China initial trade agreement raised hopes that new LNG commercial deals could occur in the future.

Magnolia LNG already has a permit certificate from federal regulators and a fully wrapped engineering, procurement and construction contract. To date, it hasn’t announced any firm offtake deals.

In late 2019, it announced it had reached a nonbinding memorandum of understanding with Delta Offshore covering 2 million mt/year of LNG from Magnolia. The LNG would, in turn, be used to fuel a 3,200 MW combined-cycle power plant that has been proposed in Vietnam. The plant will deliver power generation to Bac Lieu Province under a power purchase agreement.

S&P Global Reports that Delta Offshore now says the first 750 MW of capacity would be online by 2024, a year later than LNG Limited had anticipated in September, pending government approvals. Delta Offshore said the power project wouldn’t be be fully implemented until 2027 at the latest.

S&P Global Platts has the full story.