Flex LNG Completes MoU for Floating Liquefaction Project

Flex LNG Ltd has concluded a Memorandum of Understanding (MOU) with a leading international energy corporation for a floating liquefaction project.

Road Town, Tortola, 29 August 2007. FLEX LNG Ltd. (Oslo OTC: FLNG) announced on Friday 24 August that the company had signed an MOU with a leading international energy corporation involving a proposed floating liquefaction project that is intended to employ at least one of FLEX LNG’s LNG Producer (LNG/P) vessels on order at Samsung Heavy Industries (SHI) in South Korea.

The LNG/P will have an annual liquefaction capacity of approximately 1.0 million tons per annum and the unit would be employed on a long-term contract in the Australasia region. The contract period would commence immediately after delivery from SHI in 2011.

When commenting on the signing of the MOU, Chief Executive Officer of FLEX LNG, Philip Fjeld stated:

"The company is excited about the signing of the MOU, which confirms the exceptionally strong commercial interest shown by the market for FLEX LNG’s vision and strategy of building a global portfolio of floating liquefaction projects. We also see this as a strong sign that the LNG industry embraces our vessel based approach; bundling proven technology such as the SPB LNG containment system and the nitrogen expander cycle. Based on a large project portfolio FLEX LNG is very confident that further commercial progress will be demonstrated during the remainder of 2007.

"The growth of the LNG industry is today hampered by massive cost escalation seen on the large onshore liquefaction developments. The most recently announced liquefaction projects have been concluded with a CAPEX commitment of more than USD 1000/ton annual LNG production capacity. FLEX LNG’s CAPEX is in the range of USD 450-500/ton annual LNG production capacity, even with 1/5 of the annual production capacity compared to a typical onshore project. The LNG industry needs to think outside the box and add flexibility to the value chain in order to find economically efficient solutions to meet the increasing global demand for LNG. This is what FLEX LNG is all about."

Philip Fjeld further stated: "FLEX LNG’s LNG/P design is a result of commitment, resourcefulness and a firm vision from FLEX LNG, but it is also a testament to the dedication shown to the LNG/P project by our world leading partners. FLEX LNG is particularly proud of the unique partnership with SHI, which has evolved over the past year and where both parties are working towards a common goal. SHI, one of the world’s leading yards, brings a unique mix of engineering and construction skills, which have been shaped through an innovative approach over many years developing some of the world’s most advanced floating units." FLEX LNG was incorporated in 2006 with the objective of commercializing the world’s first floating liquefaction units (LNG/P) and signed a ship building contract with SHI on 14 March 2007 for two units utilizing the SPB LNG containment system. By using a nitrogen expander cycle, the most robust and flexible liquefaction technology in use in the LNG industry, an LNG/P can source gas from hundreds of potential offshore locations world wide where natural gas today is either left stranded or is being flared.