Delfin inks preliminary equity, offtake deal with MidOcean for second LNG vessel

US LNG developer Delfin Midstream has reached a preliminary deal for EIG-managed MidOcean Energy to acquire up to a 50% equity interest in a proposed second floating export vessel offshore Louisiana and a corresponding share of LNG production from the project, the companies said July 15.

The agreement, which is subject to Delfin reaching a final investment decision on the second vessel and satisfying certain other conditions, showed the developer building commercial momentum in support of the expansion project after greenlighting the first vessel in early June. Delfin said it is targeting an FID on the second vessel by the end of 2026.

MidOcean is backed by Saudi Aramco and has interests in several LNG projects globally, including projects in Australia, LNG Canada and Peru LNG.

In addition to the potential equity deal, Delfin said it also issued a limited notice to proceed to contractor Siemens Energy for long-lead equipment for the second vessel, including four gas turbines and mixed-refrigerant compressors.

Each of Delfin's FLNG vessels is designed to produce about 4.4 million metric tons/year. The developer has said it plans to reach FIDs on three vessels over the coming year, for a total capacity of about 13.2 million mt/year.

Delfin and MidOcean said they also agreed to collaborate on pre-development activities to accelerate a potential third vessel.

"This milestone underscores the commercial readiness of our floating LNG platform, and is another significant step towards global energy security rapidly following a positive FID for Delfin's FLNG1," Delfin CEO Dudley Poston said in a statement. "We are pleased to partner with MidOcean, whose deep LNG expertise and financial capabilities make them an ideal partner for FLNG2 and beyond."

Delfin's FID in June marked the first offshore LNG export project to advance to construction in the US.

Development work on the expansion is progressing at a time when global LNG spot prices remain elevated and volatile amid supply disruptions caused by the war in the Middle East.

Platts, part of S&P Global Energy, assessed the August JKM benchmark price reflecting LNG delivered to Northeast Asia at $20.191/million British thermal units on July 15, up 75.5 cents from the previous assessment and about 89% above prewar levels.

In the Atlantic, Platts assessed the DES Northwest Europe marker for August at $18.115/MMBtu July 15, up 52.7 cents/MMBtu day over day and about 83% higher than before the conflict.