Magnolia LNG picks SK for technical services work

Australia-based Liquefied Natural Gas subsidiary Magnolia LNG has executed a technical services agreement with SK Engineering and Construction Co. (SKEC Group).

The deal relates to the ongoing engineering, procurement and construction (EPC) activities for MLNG’s planned 8 million tpy Magnolia LNG project in Lake Charles, Louisiana.

Under the agreement, the SKEC Group will, among other things:

  • Continue to review all pre-front end engineering design (FEED) information and data included in the preliminary resource reports submitted to the Federal Energy Regulatory Commission (FERC).

  • Assist MLNG to complete the final resource reports as part of MLNG’s filing application to FERC, which is targeted for submission by the end of April 2014.
  • Complete the FEED for the Magnolia LNG project including gas pre-treatment facilities, 4 LNG trains (each with nominal LNG production capacity of 2 million tpy),2 x 160,000 cubic meter full containment storage tanks, jetty and ship loader facilities and all related infrastructure and services.

  • Prepare a detailed lump sum turn-key (LSTK) EPC cost estimate on an open book basis by November 28, 2014.

  • Negotiate and agree with MLNG a detailed LSTK EPC contract “term sheet”, which is targeted for completion by June 30, 2014.

  • Negotiate and agree a definitive and binding LSTK EPC contract based on the term sheet.

The SKEC Group says it has been progressing for some time on several of the above activities under a shorter-term letter of engagement, which is now superseded by the this agreement.

In addition, the SKEC Group has already completed a satisfactory detailed review of the OSMR process technology, which will be employed in the Magnolia LNG project, and provided the company with an initial estimated EPC cost of $1.57 billion, which was consistent with the budget estimate, including appropriate contingencies.

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