SEOUL, South Korea, Feb. 26, 2013 /PRNewswire/ -- Levant LNG, a subsidiary of Pangea LNG B.V., today announced it has executed a historic Heads of Agreement ("HOA") with Gazprom Marketing and Trading Switzerland AG ("GM&T CH"), a subsidiary of major gas industry leader Gazprom, in which the parties agreed to negotiate in good faith a binding agreement for the sale of the LNG to be produced at the Floating LNG (FLNG) facility.
The SPA will be for LNG sales based on feed gas provided by the Tamar Partnership, an upstream consortium including Noble Energy Mediterranean Ltd, Isramco Negev 2 Limited Partnership, Delek Drilling Limited Partnership, Avner Oil Exploration Limited Partnership, and DorGas Exploration Limited Partnership. These companies are the owners and producers involved in the discovery of significant natural gas resources in the Tamar and Dalit fields offshore Israel.
The execution of this deal will be a breakthrough for the LNG industry, representing what will become the first-ever SPA from a FLNG project to a third-party independent buyer without involvement of a major IOC. The execution of the HOA is a major step underpinning the project's financial feasibility, and will create the world's first project-financed FLNG export facility.
In November 2012, Levant LNG executed a Cost Sharing Agreement (CSA) with Tamar Partners to develop a FLNG export terminal off the coast of Israel. Specifically, this HOA defines the terms for Levant LNG to sell 3 Million Tons per annum of LNG, being the estimated total output from the FLNG facility, to GM&T CH on a FOB basis for a period of 20 years.
Today's momentous agreement provides that the parties shall agree upon the form of financial support that GM&T CH will provide to the project partners, in such scope and terms to be agreed by the parties. These and other negotiated terms of the commercial transaction provide key building blocks for financing of the FLNG project and provide great progress towards a Final Investment Decision (FID), expected by the end of 2013.
"The Pangea business model offers the opportunity for all stakeholders to take part in the value enhancement from gas production through the FLNG/midstream solution to the final off take of LNG," said Kathleen Eisbrenner, Pangea CEO. "Pangea LNG opens the potential for national oil companies and owners of small to medium size gas reserves to monetize stranded gas and take part in the value creation in the entire value chain."
Alongside the execution of the HOA, Levant LNG is launching the FEED for LNG production from the Tamar field, which will become Israel's first LNG export facility.
Pangea LNG B.V. is a holding company with two major FLNG projects currently under development: the South Texas LNG Export Project on the Texas Gulf Coast, which recently earned U.S. Department of Energy approval to export LNG to Free Trade Agreement (FTA) nations, and awaits approval to export to non-FTA countries; and the Tamar Project, 60 miles off the shore of Israel. Pangea LNG is a developer of floating and land-based liquefaction projects which are designed to accelerate and support the monetization of gas reserves, particularly those that are stranded or have limited access to markets.
Pangea LNG brings together a team that generated the innovations that are at the foundation of the floating LNG sector. DSME, the majority owner of Pangea, is one of the world's leading shipbuilders and a contractor for major energy companies providing them with offshore platforms, drilling rigs and floating production units. The company builds special purpose vessels and specializes in LNG carriers. It constructed nine of the 11 floating LNG regasification vessels now in service.
Pangea LNG brings together a team that was responsible for generating the innovations that are at the foundation of the floating LNG sector. Pangea LNG B.V. is owned by NextDecade International, D&H Solutions AS and DSME. For more information, please visit www.PangeaLNG.nl.
SOURCE Pangea LNG B.V.