Magnolia LNG, LLC is pleased to advise that parent-company Liquefied Natural Gas Limited (ASX: LNG; OTC ADR: LNGLY) has agreed to an EPC contract with SK E&C USA (EPC Contract) in relation to the Magnolia LNG Project. The Contract covers the initial 4 mtpa LNG installation, comprising two LNG trains, each with a LNG design capacity of 2 mtpa, two 160,000m3 storage tanks, a jetty and ship loading facility and related infrastructure, and all required approvals and licenses for the full 8 mtpa project. An additional two x 2 mtpa trains (Trains 3 & 4) are planned to follow the initial 4 mtpa installation.

The EPC Contract, which is a Lump Sum Turn Key model, has now been forwarded to BNP Paribas, MLNG’s project finance adviser, Merlin Advisors LLC, the lenders’ technical consultant, and legal advisors White and Case for final review. The finance adviser review aims to ensure third party acceptability of all proposed EPC Contract provisions to enable MLNG financial close consistent with project timelines. The EPC Contract has also been forwarded to Stonepeak Partners LLC, the proposed Magnolia LNG Project Equity partner, for their final review together with its advisers.

Execution of the EPC Contract is planned for later this month, subject to LNGL Board approval.

The capital cost for the initial contracted work totals $1.986 billion for the two-train installation and associated facilities, and comprises two components:

1. A Lump Sum, Fixed Price of US$1.391 billion (70% of contract value) valid through 30 June 2015; and
2. A Provisional Sum of US$595 million representing 30% of contract value

During the period to 31 March 2015, LNGL and SK E&C will conduct further optimization and cost reductions. Any resultant cost reductions will be apportioned between the parties, but in any event, the Lump Sum component will not exceed the agreed fixed price of US$1.391 billion. The Company and SK E&C will continue to develop, finalize and agree the Provisional Sum by 31 March 2015, with the agreed amount converting to a lump sum, fixed price contract at that time, also valid to 30 June 2015.

During the period to 31 March 2015, the parties will also agree to the capital cost for Trains 3 & 4, currently estimated at ~US$1 billion total for the two trains, and a timeline to fully implement the 8 mtpa MLNG Project at an estimated total cost of US$3.5 billion.

Magnolia LNG President, Maurice Brand, said that based on the extensive FEED and costing work completed and with the open book nature of the SK E&C Group agreements, the final EPC capital cost is estimated at ~US$3 billion, with a total MLNG Project cost for the 8 mtpa project (inclusive of Company costs) estimated at US$3.5 billion. The Company first advised the estimated total cost of US$3.5 billion on 24 February 2014, and this capital cost estimate has been included in all documentation submitted to the Federal Energy Regulatory Commission (FERC) as part of MLNG’s filing currently being progressed with FERC.

“Based on recently reported data, MLNG remains at the very low end of capital costs on a per/tonne basis, when compared with other US LNG projects. The SK E&C costs reinforce the Company’s view that our business model of mid-scale, modular based LNG trains of 2 mtpa design capacity, incorporating the LNGL’s OSMR® LNG liquefaction process, is valid and provides for a sustainable long-term business that can be replicated in the future”, said Mr.Brand.

MLNG’s Chief Operating Officer, John Baguley said, “I am pleased with the steady progress being made with the SK E&C Group as we work through all the EPC Contract and project related activities towards planned financial close in mid-2015. The period through to 31 March 2015, during which we will convert the Provisional Sum into a combined lump sum, fixed price contract valid to 30 June 2015, will position Magnolia LNG to immediately enter construction phase once all necessary approvals and licenses are received. This period will also allow us to incorporate any comments received from FERC as it prepares the Draft Environmental Impact Statement, and to undertake the rigorous planning and scheduling required to provide first LNG in 2018. The SK E&C project schedule and budget through to 30 June 2015 remain on target.”

About the Magnolia LNG Project

The Magnolia LNG Project is 100% owned by Magnolia LNG LLC, which is a wholly owned subsidiary of Liquefied Natural Gas Limited. The project comprises the proposed development of an 8 mtpa LNG project on a 115 acre site, on an established LNG shipping channel in the Lake Charles District, State of Louisiana, United States of America.

The project is based on the development of four x 2 mtpa LNG production trains using the Company’s wholly owned OSMR® LNG process technology, and the completed LNG plant front end engineering and design from the Company’s Gladstone Fisherman’s Landing LNG Project in Queensland, Australia.

Magnolia LNG Project’s business model is to provide liquefaction services to LNG buyers who pay a monthly fixed capacity fee, plus all LNG plant operating and maintenance costs. In addition, each LNG Tolling Party is responsible for supplying and transporting gas to the Magnolia LNG Project at its own expense.

About Liquefied Natural Gas Limited

Liquefied Natural Gas Limited (ASX:LNG; OTC ADR:LNGY) is an Australian public listed company (ASX: LNG) based in Perth, Western Australia.

Our vision is to bring a dynamic concept of mid-scale liquefied natural gas ("LNG") projects to the international energy market.

To see how our plant efficiency is 30% better and our capital cost half that of others, visit Improved LNG Process - Better Economics for Future Projects.

Our objective is to create substantial shareholder value by combining innovation, enterprise and leading edge technology. Our corporate strategy is to become the leader in the mid-scale LNG sector of the international energy market by identifying and then supplying "fast-track" energy solutions to both gas suppliers and energy users who would otherwise not have access to natural gas or have a mismatch of LNG supply and demand due to the long lead time to develop major LNG projects.

See the site of Magnolia LNG project