Exmar, Pacific break off FLRSU deal

Belgian shipping group Exmar NV and Pacific Exploration and Production, formerly known as Pacific Rubiales, have agreed to terminate an agreement for the provision of what was claimed to be the world’s first floating liquefaction regasification & storage unit (FLRSU). 

The tolling agreement, originally executed in March 2012 for a term of 15 years, was for the delivery of a floating liquefaction unit with a liquefaction capacity of approximately 0.5 million tons per annum of liquefied natural gas (LNG) and a storage volume of 16,100 m³, and it was supposed to be located on the Colombian Caribbean coast.

According to Exmar, since the execution of the tolling agreement the domestic natural gas market in Colombia and international LNG market have changed substantially making the liquefaction of LNG in Colombia no longer economic for Pacific. The settlement agreement stipulates a termination fee payable by Pacific Exploration and Production to Exmar in monthly installments from March 2016 until June 2017.

Exmar added that by virtue of the settlement agreement as of March 3, 2016, any and all obligations in connection with the tolling agreement have been terminated, except for customary survival clauses (e.g. confidentiality and dispute resolution) and makes the unit available for other projects around the world.

Exmar stated that the unit will be delivered in the second quarter 2016 from the Wison shipyard in Nantong, China.

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