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Magnolia LNG's long-term tolling deal with Meridian LNG collapses

The binding agreement between Australia's LNG Ltd. and Meridian LNG Holdings Corp. for liquefaction services at the Magnolia LNG LLC export project fell through after the parties mutually agreed to not extend the deal.

Meridian LNG in July 2015 entered into a liquefaction tolling agreement for firm capacity of up to 2 million tonnes per year from Magnolia LNG's proposed LNG export project on the Calcasieu shipping channel in Louisiana. The deal provided for firm annual capacity of 1.7 million tonnes per annum with an option for Magnolia LNG to offer another 0.3 mtpa.

The agreement was for an initial term of 20 years and has been extended six times since.

"LNG [Ltd.] is appreciative of the relationship we have enjoyed with Meridian LNG. However, this decision allows us to free up desired capacity from Magnolia LNG for offtakers that are more closely aligned with Magnolia's development needs," said Gregory Vesey, managing director, CEO and director of LNG, in a Dec. 21 filing.

The Australian company said it will continue to market Magnolia LNG as it nears a final investment decision on the project, which was previously pushed back, citing trade tensions between the U.S. and China. LNG Ltd. also recently extended its engineering, procurement and construction contract for the export terminal.