LNG surges on Magnolia deal
Shares in LNG hit a fresh all-time high today after the company announced Meridian LNG had agreed to progress a 20-year liquefaction tolling agreement with LNG's Magnolia plant in the United States.
The agreement follows Merdian's 20-year gas sales agreement with E.On Global Commodities.
LNG said it has substantially completed the negotiation of a long-term agreement for a total of 2mtpa.
It said it would announce the specific terms of the agreement upon completion of a binding contract.
Meridian will be responsible for delivery of gas to Magnolia for liquefaction, plant usage, storage and delivery onto LNG ships arranged by Meridian.
LNG's US subsidiary will be paid monthly capacity fees over the 20-year tolling term.
Meridian, together with its operating partner Höegh LNG, will export gas from the Magnolia plant to an LNG import terminal in the UK.
Meridian will deliver re-gasified LNG to E.On Commodities on the UK National Transmission System under the 20-year gas sales agreement.
Magnolia chief commercial officer Rick Cape congratulated Meridian on the signing of its gas sales agreement with E.On and said the company looked forward to concluding negotiations with Meridian on a long term agreement.
He said he was confidence of reaching Magnolia's full 8mtpa capacity given the progress towards additional tolling agreements and LNG sales and purchase agreements.
LNG first flagged a potential deal with Meridian in November 2013. In December last year, the company signed a $US3.5 billion contract South Korea’s SK Engineering and Construction to build the Magnolia plant.
LNG hopes to replicate its small-scale gas liquefaction technology at other sites.
The company counts several big US hedge funds among its shareholders.
Shares in LNG hit an all-time high of $5 in intraday trade on the news. However they came off slightly from that peak to close up 65 cents, or 15.66 per cent, to $4.80.
Shares in the company have staged a meteoric rise in the past 18 months from a low of 12 cents in June 2013.
