Golar buy-in advances Canadian LNG export plan
The smallest participant in the Canada's burgeoning LNG race took a major step forward this week after finalising contract awards for both feedgas supply and LNG purchase and offtake for the project's first planned liquefaction train.
Canadian developer BC LNG Export Co-Operative awarded the purchase and offtake agreement for its Douglas Channel barge-based liquefaction project to shipping company Golar LNG and US-based LNG investor LNG Partners, the two buyers said in separate statements this week.
The offtake contract for a total of 700,000 tonnes per annum (tpa) from the export facility's first train will be linked to Canada natural gas indexes, according to Tom Tatham, project manager and owner of LNG Partners, one of the export scheme's developer along with British Columbia's Haisla First Nation.
Golar LNG and LNG Partners will initially undertake to jointly market the volumes to global trading companies and utilities, a move reflecting the companies' ambitions to expand their activities in LNG trading.
Golar LNG originally launched a trading subsidiary, Golar Commodities, in October 2010, but trading losses of as much as $8.7m during one quarter led the company's board to reduce its trading activity in early 2011.
Offtake volumes will most likely all be delivered ex-ship (DES), Tatham said.
Golar LNG agreed last October to provide two newbuild 160,000 cubic metre (m³) vessels for long-term charter for the export scheme, which is currently targeting a Q2 2015 start-up.
A second train has been planned at the Douglas Channel project, located close to Kitimat in British Columbia, eventually total 1.8mtpa.
In the interim, Golar LNG Limited and LNG Partners are finalising a financing package for the project that would provide for construction and commissioning of initial facilities, which are still subject to receipt of final required permits.
The aim is to complete all investment agreements by 28 February, Tatham said, although it is still to be determined the respective role of LNG Partners and Golar LNG in the construction and commissioning of the plant.
BC LNG Export Co-Operative also finalised a contract with LNG Partners for the supply of feedgas for train 1, the latter entity said.
BC LNG took nominations from participating co-operative members only for feedgas suppliers and offtakers, which amounted to five for each contract, according to Tatham.
But the train's development is still at an early stage as it will depend on availability of new pipeline capacity.
Negotiations will start first with potential customers for the project's first train, Tatham said, adding that LNG Partners is interested in taking volumes in the planned second unit, with firm long-term DES contracts in place and Haisla Nation concurrence.
BC LNG was the second Canadian project to earn a long-term, 20-year export approval from the governing National Energy Board, which was granted in February last year.
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