SOURCE: King & Spalding

King & Spalding, a leading international law firm

February 03, 2011 11:43 ET

King & Spalding Advises on Innovative Modular LNG Project

SINGAPORE--(Marketwire - February 3, 2011) - International law firm King & Spalding advised Pacific LNG Operations, Ltd., on a project funding and construction agreement (PFCA) and a shareholders agreement between the company's affiliate Liquid Niugini Gas Ltd. (LNGL) and Energy World Corporation Ltd. The agreements set out the parameters for the development, construction, financing and operation of a planned three million ton per annum (mtpa) land-based modular liquefied natural gas (LNG) plant in the Gulf Province of Papua New Guinea. LNGL is a joint-venture project company owned by Pacific LNG and InterOil Corporation.

The LNG plant is intended to be developed in two phases: two mtpa followed immediately by a one-mtpa expansion. The contractual terms relating to the thee-mtpa plant have been defined with the execution of the two agreements. The LNG plant is expected to process an estimated 2.25 trillion cubic feet of natural gas over 15 years. In return for its commitment to fully fund the development and construction of the LNG plant, the agreements provide that EWC will be entitled to a fee derived from the proceeds from the sale of LNG from the plant, less agreed deductions and financing costs, subject to adjustments based on timing and execution, and that EWC will also own a 14.5 percent interest in the operating company of the LNG plant.

The LNG project with EWC for the development of the modular LNG plant is designed to link with InterOil's proposed condensate stripping plant being pursued in joint venture with Mitsui Group and to accelerate the intended monetization of the Elk and Antelope fields in Papua New Guinea. The agreements with EWC provide a framework for the possible expansion of the initial LNG plant's capacity to up to 8 mtpa of LNG.

The PFCA and shareholders agreement with EWC are conditional on reaching a final investment decision to proceed with the LNG plant no later than December 31, 2011. Between now and then, the parties to the agreements expect to complete arrangements for plant design, financing and government approvals. The current LNG project schedule is aiming for the final investment decision to occur simultaneously for each of the proposed LNG plant and condensate stripping plant by June 30, 2011, with a proposed combined plant start-up approximately 30 months later.

The King & Spalding partners assisting Pacific LNG on this project are Singapore-based partners Dan Rogers and John Savage. Also on the legal team are counsel Nina Howell (London), senior attorney Jacqueline Bredhauer (Singapore), and associates Simon Halliwell (London) and Simon Dunbar (Singapore).

King & Spalding is a leader in the international LNG industry and has been described by Chambers Global as being "a premier LNG project development practice." The firm recently received the "Gold Award" as the best U.S. law firm in the project finance, infrastructure and energy category at the International Legal Alliance Summit and Awards 2010 in Paris, France. The firm is presently advising on five LNG production and export projects, and has handled the closing transactions for numerous new-construction LNG terminals and expansions to existing LNG terminals around the world.

About King & Spalding
King & Spalding is an international law firm with more than 800 lawyers in Abu Dhabi, Atlanta, Austin, Charlotte, Dubai, Frankfurt, Geneva, Houston, London, New York, Paris, Riyadh (affiliated office), San Francisco, Silicon Valley, Singapore and Washington, D.C. The firm represents half of the Fortune 100 and in a recent Corporate Counsel survey was among the top firms representing Fortune 250 companies. For additional information visit www.kslaw.com.

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