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LNGL and DeltaOE extend their agreement

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LNG Industry,

LNG Limited (LNGL) has announced that its 100% owned project company, Magnolia LNG LLC (Magnolia), and Delta Offshore Energy Pte Ltd (DeltaOE) have agreed to extend the validity date of their agreed upon non-binding term sheet until 1 July 2020 by entering into an amended and restated memorandum of understanding (MoU).

According to the statement, the parties also agreed to use reasonable efforts to negotiate and reach an agreement on the terms and conditions of a definitive binding sale and purchase agreement (SPA) by 31 May 2020.

Additionally, LNGL claims that the previously agreed SPA condition precedent requiring ‘financial close’ has been amended, and will instead be conditional only on the company making a financial investment decision (FID) in relation to the Magnolia liquefaction project by 31 August 2020. An FID is dependent upon Magnolia securing sufficient offtake agreements to support financing. LNGL claims that all dates may be waived or extended by agreement between the parties.

Greg Vesey, Managing Director and CEO, LNGL, said: “We feel that the extensions will provide LNGL and Delta Offshore Energy with more than adequate time to finalise terms for what will be the first long-term sale and purchase agreement for LNG to Vietnam.”

According to the statement, the term sheet details material terms of the proposed LNG SPA having a target commercial start date of no later than 1 June 2024 (which may be adjusted by Magnolia by +/- up to 7 months). DeltaOE and Magnolia are obligated to use reasonable efforts to negotiate and agree the binding terms and conditions of the SPA pursuant to which Magnolia will supply 2 million tpy of LNG to DeltaOE for a term of at least 20 years. The proposed volume of 2 million tpy represents 25% of Magnolia’s current nameplate capacity of 8 million tpy (to be increased to 8.8 million tpy subject to approval by the Federal Energy Regulatory Commission (FERC)). Pricing under the proposed SPA remains as set out in the earlier Term Sheet.

Execution of the SPA (which will remain subject to the FID condition precedent referred to earlier) will take place once the SPA terms are finalised and agreed and once DeltaOE obtains the necessary government and regulatory approvals for the integrated project, including the official notification of the project into Vietnam’s national power 2 development plan (Power Development Plan 7 revised).

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