LNG Ltd.'s Magnolia LNG export project signed a nonbinding agreement for the supply of up to 4 million tonnes per annum of LNG, half the terminal's planned capacity, to a floating import terminal off the east coast of India for 20 years.

The heads of agreement is dependent upon conditions including Magnolia LNG closing on Vessel Gasification Solutions Inc.'s Krishna Godavari LNG terminal, as well as on Vessel Gasification Solutions satisfying "defined credit requirements underpinning their LNG purchases within agreed timeframes," according to a Jan. 23 news release.

"It's a positive step for Magnolia. It indicates that they're in the marketplace, engaging offtakers," Ernie Megginson, president of the energy projects consulting firm Megginson & Associates Inc. and former vice president of development for Magnolia LNG, said in an interview. "There's a lot of work to be done to move from [a heads of agreement] to a binding agreement, but this is a good first step."

Magnolia LNG received FERC approval in April 2016 for the 8 mtpa liquefaction and export terminal near Lake Charles, La., and was given U.S. Department of Energy authorization in November 2016 to export to countries that do not have free trade agreements with the U.S. The Louisiana terminal would include four liquefaction trains, each with a nominal capacity of 2 mtpa. (FERC docket CP14-347, DOE docket 13-132-LNG)

"We look forward to supplying long term volumes to the Indian market to meet their growing needs for clean energy," Greg Vesey, managing director and CEO of LNG Ltd., said in the Jan. 23 statement. "Overall, this agreement represents another important step forward for the [Magnolia LNG project]."