[Mexico] Lakach FLNG

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Sembcorp Marine Secured FLNG Facilities Conversion Projects from New Fortress Energy
Sembcorp Marine awarded Master Service Agreements for the engineering, conversion, topside fabrication and integration of two Sevan drilling vessels into Floating LNG facilities

This award underpins Sembcorp Marine’s proven capabilities to provide customised solutions to clients in the energy sector

Singapore, 20 October 2022 – Sembcorp Marine Ltd (“Sembcorp Marine” or “SCM”), through its wholly-owned subsidiary, Sembcorp Marine Rigs & Floaters Pte Ltd, entered into Master Service Agreements with New Fortress Energy Inc. (NASDAQ: NFE) affiliates for the engineering and conversion of two Sevan cylindrical drilling vessels to Floating LNG (“FLNG”) liquefaction facilities, including the fabrication and integration of LNG topside modules.

The hull conversion and fabrication of topsides for the first FLNG liquefaction facility is scheduled for delivery in the first half of 2024 through the Work Engagement Contract awarded by NFE. Work on the second FLNG liquefaction facility project is expected to be contracted through further Work Engagement Contracts to Sembcorp Marine at a later date.

The two FLNG liquefaction units will host the NFE-designed Fast LNG liquefaction production facility with a capacity of approximately 1.4 mtpa (million tonnes per annum). LNG produced will be stored in a separate LNG tanker moored near the FLNG liquefaction facility. While NFE currently has Fast LNG liquefaction facilities on jack-up rigs under construction in the U.S., this marks the first set of two Sevan cylindrical hulls to be re-purposed into FLNG liquefaction facilities.

Mr William Gu, Senior Vice President & Head of Sembcorp Marine Rigs & Floaters Pte Ltd, said, “We are pleased and honoured to partner New Fortress Energy in its Fast FLNG programme through these two FLNG conversion projects incorporating SCM’s proprietary Sevan cylindrical hull design. Marking SCM’s successful penetration of the FLNG market, these projects allow our customer to rapidly deploy FLNG facilities to capture the growing demand for LNG liquefaction terminals, and to tap on SCM’s full suite of floating and nearshore LNG solutions that are well placed to meet the needs of the burgeoning LNG market.”

Mr Wong Weng Sun, President and CEO of Sembcorp Marine Ltd, said, “These landmark FLNG conversion projects signal the broadening of our capabilities to provide customised solutions to clients across the energy value chain. Over the years, Sembcorp Marine has advanced its EPC capabilities towards solution-driven initiatives through investments in technology companies such as Sevan SSP. Our continuous R&D efforts have also enabled Sembcorp Marine to successfully develop and commercialise our proprietary designs and solutions like this FLNG conversion and our Wind Turbine Installation Vessel (WTIV) for the cleaner energy and renewables segment awarded earlier this year. Sevan SSP circular hull design also offers excellent solutions for the electrification of offshore hydrocarbon production units, offshore wind floating substations and converter platforms, and carbon capture, utilisation and storage (CCUS) applications.”

The above contract is not expected to have a material impact on the net tangible assets or earnings per share of Sembcorp Marine for the current fiscal year.

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NFE Finalizes Agreements with Pemex to Complete Lakach Offshore Gas Field, Deploy FLNG Solution

NEW YORK--(BUSINESS WIRE)--Nov. 22, 2022-- New Fortress Energy Inc. (NASDAQ: NFE) (“NFE” or the “Company”) announced today that it has finalized its agreements with Petróleos Mexicanos (“Pemex”), Mexico’s state-owned oil company, to develop and operate an integrated upstream and natural gas liquefaction project off the coast of Veracruz in Southeastern Mexico.

The agreements comprise a long-term strategic partnership, expressly supported by His Excellency Andrés Manuel López Obrador, the President of Mexico, to complete the development of the Lakach deepwater natural gas field, one of the largest non-associated gas fields in the Gulf of Mexico.

NFE will invest in the continued development of the Lakach field over a two-year period by completing seven offshore wells. In addition, NFE will deploy to the Lakach field its 1.4 MTPA Sevan Driller FLNG unit, which is currently undergoing conversion in a shipyard in Singapore, to liquefy the majority of the produced natural gas.

“We are pleased to finalize our strategic partnership with Pemex, which strengthens our commitment to long-term operations in Mexico and we believe demonstrates the substantial value of our integrated natural gas infrastructure business model,” said Wes Edens, Chairman and CEO of NFE. “This arrangement represents the first of what we consider to be an ideal formula for the deployment of NFE’s FLNG units to stranded gas plays around the world – one that combines gas for domestic use with low-cost supply for LNG export into global markets.”

NFE anticipates the all-in cost of producing LNG at Lakach will be among the lowest in the world. The Lakach FLNG unit is one of five FLNG units NFE plans to deploy in the next two years, adding approximately 7.0 MTPA of incremental liquefaction capacity to the global market – more than half of the world’s total expected capacity additions during the 2023-2024 period.

Agreements

Pursuant to the agreements, NFE will provide upstream services to Pemex whereby NFE produces natural gas and condensate in exchange for a fee for every unit of production delivered to Pemex. The fee is based on a contractual formula that resembles industry-standard gross profit-sharing agreements between the upstream service provider (NFE) and the owner of the hydrocarbons (Pemex).

NFE will produce natural gas in the Lakach field and will have the right to purchase, at a contracted rate, sufficient volumes for its FLNG unit, while Pemex will sell the remaining natural gas volumes and all of the produced condensate to its customers onshore.

“Over the last several months, we have enjoyed the opportunity to expand our relationship with Mexico’s leading energy companies,” continued Mr. Edens. “We appreciate President López Obrador’s continued interest in and support of our development process and look forward to delivering reliable solutions that enhance energy security for the people of Mexico and our customers around the world.”

Lakach Field

Pemex discovered the Lakach deepwater natural gas field in 2007 and subsequently carried out significant exploration and development activities. Pemex ceased allocating capital to the field and suspended further development amid oil price declines in 2014. Under the leadership of President López Obrador, the Mexican government has stated that completing Lakach is a matter of national interest.

“Pemex is pleased to finalize this strategic partnership with NFE, a leading energy infrastructure company,” said Octavio Romero Oropeza, CEO of Pemex. “We believe this partnership will enable Pemex to efficiently leverage our domestic natural gas resources, fulfill Mexico’s security of supply targets, and facilitate gas-fired power infrastructure development in the region.”

NFE and Pemex believe the Lakach field will yield approximately ten years of production, with the possibility of significantly extending the reserve life if the nearby Kunah and Piklis fields are developed. Coupled with these nearby fields, the area around Lakach has a total resource potential of 3.3 trillion cubic feet (“Tcf”) and comprises one of the most significant undeveloped offshore natural gas resources in the Western hemisphere.

The transactions described in this press release are subject to customary terms and conditions.