Flex LNG signs up a third floating liquefaction customer
Flex LNG has signed a Letter of Intent (LOI) with an unnamed LNG market participant for one of its LNG Producer vessels on order at Samsung Heavy Industries (SHI) in South Korea. The letter includes the option for another unit to be delivered by Flex LNG, and marks the company’s third agreement since August.
The vessel will have an annual production capacity of at least 1 million tonnes, and will be employed under a 20-year contract, Flex said. However, a specific geographical location has not yet been defined, and it is likely that the vessels, all of which will produce around 1 mtpa, could be utilised on several fields during the contract lifetime. A Final Investment Decision (FID) on the LOI is targeted within 2008.
Flex LNG c.e.o. Philip Fjeld said the company’s commercial backlog now comprised three projects located in both the Atlantic Basin and the Asia-Pacific Basin. Two weeks ago, it concluded a Memorandum of Understanding (MoU) with Peak Petroleum Industries Nigeria for a floating liquefaction project offshore Nigeria, and its agreement in August was for a project in South East Asia.
“The current and future new building programme enables us to provide the industry with floating liquefaction units from early 2011 onwards. Given the shortage of LNG supply in this timeframe, we are seeing a great demand for the earliest possible delivery,” said Fjeld.
Trading in Flex LNG’s shares started on the Norwegian over-the-counter (OTC) market in April this year. It signed a shipbuilding contract for two M-Flex LNG vessels with SHI in March, and placed an order for a third in October 2007. The first vessel is due for delivery in the fourth quarter of 2010, with the second due six months later.
“The technology is not new. It has been applied for a large number of small- and medium-scale LNG facilities onshore, and is also installed for re-liquefaction of boil-off gas from the cargo tanks of the large LNG carriers, with diesel engine propulsion, under construction for the Qatari projects,” said Trym Tveitnes, chief technical officer at Flex LNG. “The technology is widely accepted to be the most robust, flexible and safe LNG process for shipboard applications.”
The vessel alone is costing $212 million (EUR 143 million), and the liquefaction and associated equipment will bump up the cost to around $1 billion. Flex LNG is currently undergoing a Front-End Engineering and Design (FEED) study, looking at incorporating feed gas loading, pre-treatment, liquefaction and LNG offloading and transfer, as well as the integration of the various systems on the vessel.
Project partners on M-Flex include Samsung, which is thought to have subsidised the project, in order to prove its engineering capability and secure further business in the sector. Also involved are the Houston-based consultancy Galway Group, shipbroker BRS, Framo Engineering and Hamworthy Gas Systems, which provided the on-board liquefaction technology used on the Q-Max vessels built for Qatargas.
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