FLEX LNG Executes Agreements With InterOil Corporation (InterOil), Pacific LNG Operations (Pacific LNG), Liquid Niugini Gas (LNGL) and Samsung Heavy Industries
April 11, 2011
FLEX LNG Executes Agreements With InterOil Corporation (InterOil), Pacific LNG Operations (Pacific LNG), Liquid Niugini Gas (LNGL) and Samsung Heavy Industries
FLEX LNG is pleased to announce that agreements have been executed with InterOil, Pacific LNG, LNGL and Samsung Heavy Industries for an FLNG project that would liquefy natural gas from the onshore Elk and Antelope gas fields in the Gulf Province in PNG. Commencement of operations is targeted for 2014.
 
FLEX LNG has already completed the generic Front-End Engineering and Design
(FEED) in 2009 and the project specific FEED is targeted to start in May 2011,
with the parties to work towards reaching a final investment decision (FID)
before the end of 2011. The agreements are a result of a strong collaboration
over the past 12 months between FLEX LNG, Samsung Heavy Industries,
InterOil, Pacific LNG and LNGL to work together to develop what is likely to
become the first ever floating facility to produce LNG.
 
Samsung Heavy Industries has agreed to restructure the commercial relationship
between the two parties whereby, upon achieving FID, the intention is to transfer
substantially all previous instalments paid to Samsung Heavy Industries under
the existing four shipbuilding contracts to the single FLNG unit that is destined
for the PNG project. FLEX LNG would retain its right to construct additional FLNG
units at SHI.
 
FLEX LNG and Samsung Heavy Industries will be responsible for the design,
engineering, construction and commissioning of the FLNG vessel. FLEX LNG will
also be joint operator of the FLNG unit together with LNGL, which is a joint
venture between InterOil and Pacific LNG. Construction of the FLNG unit will be
fully financed until delivery. The equity already paid in by FLEX LNG to Samsung
Heavy Industries will cover all payments to Samsung Heavy Industries until
delivery of the FLNG unit, when one final instalment will be due. FLEX LNG will
not require any additional working capital from its shareholders prior to reaching
FID. FLEX LNG’s funding requirement between FID and delivery of the FLNG
vessel is limited to general working capital and project management cost in the
period.
 
The FLNG vessel is expected to be moored alongside a jetty, which will be shared
with LNGL’s land-based LNG facilities, and have a nominal production capacity of
close to 2 million tons of LNG per annum and to process an estimated 2.25
trillion cubic feet of gas over a firm 25-year period. FLEX LNG will receive, less
agreed deductions and premiums, 14.5% of the revenue from the sale of LNG
from the FLNG vessel for an initial 15-year period. For the next 5 years FLEX LNG
will receive 12.5% of the revenue and 10% of the revenue for the last 5-year
period. During the life of the contract, LNGL will become a part owner of the
FLNG vessel.
 

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