EXMAR NV reported Tuesday that the company and Pacific Exploration and Production (PEP) have agreed to terminate a Liquefaction and Storage Agreement, originally executed in March 2012 for a term of 15 years from delivery of a floating liquefaction unit (CFLNG) with a liquefaction capacity of approximately 0.5 million tons per annum of Liquefied Natural Gas (LNG) and a storage volume of 0.5685 million cubic feet (16,100 cubic meters) (the Tolling Agreement).
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 PEP.
The Settlement Agreement stipulates a termination fee payable by PEP to EXMAR in monthly installments from March 2016 until June 2017.
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 CFLNG available for other projects around the world. EXMAR is actively negotiating new employment of the CFLNG with several counterparts and the CFLNG will be delivered in the second Quarter 2016 from the Wison shipyard in Nantong (China).
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