Freeport LNG Expansion said that it had executed 20-year liquefaction tolling agreements with Osaka Gas and Chubu Electric Power covering 100% of the liquefaction capacity of the first train of Freeport LNG’s proposed natural gas liquefaction and LNG loading facility near Freeport, Texas.
The initial 3-train facility will be capable of liquefying approximately 13.2 million tons per annum of natural gas. Freeport LNG expects that all three trains will be fully subscribed by the end of 2012.
Osaka Gas / Chubu Electric Agreements
Pursuant to the agreements with Osaka Gas and Chubu Electric, the Japanese utilities have acquired rights to the 4.4 mtpa production capacity of the first train at Freeport over an initial 20-year term. “We welcome the unparalleled LNG industry expertise and experience that Osaka Gas and Chubu Electric bring to the Freeport LNG project,” said Michael S. Smith, Freeport LNG’s Chief Executive Officer. “As two of the largest natural gas and electric utility service providers in Japan, having liquefaction tolling agreements with Osaka Gas and Chubu Electric provides the strong end-user credit support necessary to fully finance the initial train of the liquefaction project.”
Trains 2 and 3
Freeport LNG is also under exclusive negotiations with respect to the second and third trains of the liquefaction project. Definitive agreements with respect to the second and third trains are expected to be completed before year-end. It is anticipated that, upon final investment decision, the first three trains will be constructed as the initial phase of the liquefaction project. The new liquefaction facilities will be integrated into the existing regasification facilities and operated as an integrated plant.
Commencement of construction of Freeport LNG’s liquefaction project is subject to receipt of regulatory approvals and final investment decision by Freeport LNG. Key regulatory approvals include Federal Energy Regulatory Commission (FERC) authorization to commence construction and Department of Energy (DOE) approval to export LNG to countries with which the United States has not entered into a free trade agreement (FTA). Freeport LNG anticipates to receive all regulatory approvals by mid-2013, and to begin construction in the third quarter of 2013. The first train is anticipated to commence operations approximately 48 months from start of construction, with each subsequent train in operation 6-9 months after the previous train. Freeport LNG has contracted with Chicago Bridge & Iron and Zachry Construction to engineer, design and build the liquefaction project. Macquarie Capital is serving as Freeport LNG’s financial advisor with respect to the proposed financing.
LNG World News Staff, July 31, 2012