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GM&T and Pacific Rubiales announce FLNG SPA

LNG Industry,

Pacific Rubiales Energy Corp. and Gazprom Marketing & Trading Limited (GM&T), subsidiary of Russian giant Gazprom, have announced the execution of a heads of agreement (HOA) for the negotiation of a five year sale and purchase agreement (SPA). The agreement states that Gazprom’s marketing subsidiary will obtain free-on-board cargoes (FOB) from Pacific Rubiales’ floating liquefied natural gas (FLNG) project offshore Colombia.

As part of the agreement, GM&T will purchase 0.5 million tpa of liquefied natural gas (LNG) from the Pacific Rubiales FLNG project, which is due to begin production in the second quarter of 2015, and will be one of the first FLNG units in operation worldwide.

The HOA includes the key commercial terms of the SPA, which the companies will negotiate on an exclusive basis within the next nine months. As agreed under the HOA, Pacific Rubiales will procure an LNG floating storage unit (FSU) of a minimum size of 138 00 m3.

Pacific Rubiales will source the feed gas for this project from its La Creciente Field in northern Colombia and is in the process of building an 88 km, 18 in. diameter pipeline to the offshore floating liquefaction barge, which is currently under construction by Shanghai-based Wison (Nantong) Heavy Industry Co., Ltd, a subsidiary of the Wison Group.

Positive partnership

Ronald Pantin, Chief Executive Officer of Pacific Rubiales, said: "The execution of this agreement is very positive for us as it underpins the commercial start-up of the world's first operational floating LNG production unit at a pricing formula linked to international crude oil markets."

Vitaly Vasiliev, Chief Executive Officer of GM&T, expressed excitement at the partnership, which, he said, “complements Gazprom's expanding LNG portfolio. We are pleased to bring the commercial and shipping solutions to what will be the world's first floating LNG liquefaction plant in operation."

Adapted from press release by Ted Monroe

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