HOUSTON, Sept. 9, 2013 /PRNewswire/ -- Freeport LNG Expansion, L.P. (Freeport LNG) today announced that it has entered into a binding 20-year Liquefaction Tolling Agreement (LTA) with Toshiba Corporation (Toshiba) for a base quantity of 2.2 million tons per annum (mtpa), commencing upon completion of construction of the third train of Freeport LNG's proposed natural gas liquefaction and LNG loading facility on Quintana Island near Freeport, Texas.
"We welcome Toshiba as a customer to the Freeport LNG liquefaction project. We are excited to add one of the largest and most innovative global companies to our existing suite of liquefaction customers. With our separate announcement today of entry into an LTA with SK E&S LNG, LLC (SK), Freeport LNG is positioned to close financing and commence construction of the third train in late 2014," said Michael S. Smith, Chief Executive Officer, Freeport LNG. "The Toshiba agreement provides a unique opportunity for the United States to support the energy security of our close ally with long-term LNG supplies," continued Smith.
"Toshiba is happy to work with Freeport LNG and other off-take participants on this prestigious LNG export project. We hope our participation will contribute to the value improvement at our client companies and efficient generation of energy in Japan," said Yasuharu Igarashi, the Corporate Executive Vice President of Toshiba Corporation and the President and CEO of Toshiba Corporation Power Systems Company.
Freeport LNG has previously announced the execution of LTAs with Osaka Gas Co., Ltd. (Osaka Gas) and Chubu Electric Power Co. (Chubu Electric), each for 2.2 mtpa, and with BP Energy Company (BP), for 4.4 mtpa. The Osaka Gas and Chubu Electric LTAs commence upon completion of construction of the initial liquefaction train, and the BP LTA commences upon completion of construction of the second liquefaction train. It is anticipated that actual LNG production realized from each of the liquefaction trains will exceed their 4.4 mtpa design basis by more than 0.6 mtpa. To the extent this excess production volume is realized by the Freeport LNG project, the Toshiba LTA includes certain provisions for the volumes committed under the Toshiba LTA to be increased to include substantially all of such excess volumes in respect of the third liquefaction train.
"Adding Toshiba and SK to our existing customer base of Osaka Gas and Chubu Electric, two of the largest natural gas and electric utility service providers in Japan, and BP, one of the world's leading international oil and gas companies, further enhances the strength of our project and the best-in-class suite of counterparties to support financing," continued Smith. "We intend to close financing and commence construction on the initial two liquefaction trains in early 2014 upon receipt of regulatory approvals. Financing and commencement of construction on the third liquefaction train is expected in the second half of 2014."
Commencement of construction of Freeport LNG's liquefaction project is subject to receipt of authorization to commence construction from the U.S. Federal Energy Regulatory Commission (FERC) and final investment decision by Freeport LNG.
Freeport LNG has received authorization from the U.S. Department of Energy (DOE) to export the entire LNG production volume of the initial two trains of the liquefaction project to any country that has, or in the future develops, the capacity to import LNG and with which trade is permissible. Freeport LNG's application to export up to two additional trains of production volume to countries with which the United States does not have free trade agreements (non-FTA) remains pending with the DOE, and is currently second in the queue established by the DOE for review and processing of pending non-FTA export applications.
Freeport LNG expects to receive FERC approval to commence construction of the first three liquefaction trains in the first quarter of 2014. The first train is anticipated to commence operations 42-48 months from start of construction, with the second train in operation six to nine months after the first train. Construction of the third train is anticipated to begin in late-2014, and to commence operations six to nine months after the second train.
Freeport LNG has contracted with CB&I, Inc. and Zachry Industrial, Inc. to conduct the front end engineering and design for the initial three trains of the liquefaction project. Macquarie Capital and Credit Suisse are serving as Freeport LNG's financial advisors with respect to the proposed financing for the project. King & Spalding advised Freeport LNG on its agreement with Toshiba. Documentation pertaining to the liquefaction project, including regulatory applications and related materials, is available on Freeport LNG's website at www.freeportlng.com.
About Freeport LNG
Freeport LNG Expansion, L.P. is a wholly owned subsidiary of Freeport LNG Development, L.P., which owns and operates an existing LNG regasification terminal located near Freeport, Texas. The terminal started commercial operation in June 2008. Freeport LNG Development, L.P. has four limited partners: (1) Freeport LNG Investments, LLLP, an entity owned by Michael S. Smith; (2) ZHA FLNG Purchaser LLC, a Delaware limited liability company; (3) Texas LNG Holdings, LLC, a wholly owned subsidiary of The Dow Chemical Company; and (4) Turbo LNG, LLC, a wholly owned subsidiary of Osaka Gas Co., Ltd.
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SOURCE Freeport LNG